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Author: 



Woods, Clinton 






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Unified accounting 

ods for in 





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Place: 













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1919 



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MASTER NEGATIVE # 



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ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 







Woods, Clinton Edgar. 

Unified accounting methods for industrials, by Clinton 
E. Woods ... New York, The Ronald press company, 

x*yf!"484 p. nius tforms) fold, charts. 22^"". [$5.00 3 



1, Factories — Accounting. 2.^ Efficiency, Industrial. UlAy^-X^ 

0^ ' "17-5973 

Library of Congress %■ J HF5686.M3W7 



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LIBRARY 




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Unified Accounting 
Methods for Industrials 



BY 



CLINTON E. WOODS 

Industrial Engineer; Author of ''Woods' Reports,*' 
••Practical Cost Accounting," "Organizing a Factory,*' etc. 




(Third Printing) 



NEW YORK 

THE RONALD PRESS COMPANY 

X919 



w 
^ 



Co 



Copyright, 1917, by 
The Ron/»ld Press Company 




Orb. 



William Q. Hewitt PreM. Brooklyn. PrinterE 
.1 i. Tapley Co., New York. Binders 



Dedicated 

to 

My Fellow-Workers 

as an 

Instrument to Help Them 

Establish the Profession of 

Industrial Engineering 



PREFACE 



Somewhere, somehow, sometime, in the universal make- 
up of things, a relationship will be found to exist between 
all things that function toward a common end. Activities 
using the same elements must in some way be dominated 
by a common principle. If this can be discovered it will 
serve as a clue to guide the investigator to his goal or enable 
him to return to the beginning of things for a fresh start 
if analytical ramifications have led him too far afield. It is 
with this thought firmly fixed in his mind that the waiter 
has undertaken this work. Its subject matter is not new, 
but it is treated in a new way to reveal more clearly this 
condition of relationship. 

The scope of this work is limited to industrial or manu- 
facturing activities, although the principles herein set forth 
are susceptible of a much broader application. It should 
be borne in mind that this is a day not only of specialists, but 
also of specialities, and that the cunning of the inventor's 
mind has lost no opportunity to lighten the burden, lessen 
the cost, and make more accurate the work of the ofifice as 
well as that of the factory. Any method of accounting 
proposed at this time must therefore take full cognizance of 
this fact if it is to be commensurate with modern progress. 

The reader should recognize the fact that it is not to be 
supposed that any and all industries offer the same oppor- 
tunities for improvement as those cited in Chapter I of 
this work, as in nearly all instances the examples used are 
those where exceptional opportunity existed and was taken 
advantage of, thereby becoming of educational value as a 



^j PREFACE 

foundation for research work on the part of industrial 
executives who care to study them. 

It is to be noted that the forms presented, while selected 
from those in actual use, are for illustrative purposes, and 
there is no hard and fast rule preventing their modification 
or change either in captions, size, or general arrangement 
to meet any special requirements. 

It has been deemed best to present the balance sheet in 
the first part of the book. This means the giving first of that 
which would ordinarily be given last ; but it is sometimes 
well to picture a house before building it, and this would 
seem to be one of those times. 

The author realizes the impossibility of writing a book 
of this character without leaving many questions un- 
answered, and that it must necessarily be somewhat specific 
in its subject matter. It has, however, been written for the 
benefit of three classes of individuals, the executive, the 
engineer, and the accountant ; but in the main, the present 
work is one of accounting and as such is submitted to his 
fellow-workers in the industrial world with but one thought 
and one wish, and that is, that they may derive as much 
profit from the application of its principles and precepts as 
the author has had pleasure in formulating them. 

In conclusion the author wishes to express his high 
appreciation of the efficient editorial assistance given by 
Dr. Carroll W. Doten, of the Massachusetts Institute of 
Technology, and by the editorial staff of The Ronald Press 
Company— assistance which has added much to the clear- 
ness and general value of the book. 



Clinton E. Woods 



Bridgeport, Conn., 
January 2, 1917. 



CONTENTS 



Chapter ^^^^ 

I The Development, Elements, and Results 
OF Industrial or Efficiency Engineer- 

I 



ING 

A New Profession 

Conditions Which Make Industrial Engineering Neces- 
sary 
Phases of Industrial Engineering 
Principles of Industrial Engineering 
Distribution of Expense 
Unified Accounting 
Unified Output 

Function of a Sales Department 
Results of a Unified Output 
Stabilizing Production 
Standardizing Output 
Weil-Balanced Equipment 
Standardization of Labor 
Adjustment of Labor and Equipment 
Results of Scientific Management 
Broader Applications of Scientific Management 

II Analyzing an Industrial Manager's 

Monthly Balance Sheet ... 25 

The Work of a Manager 

Purposes of Unified Methods of Accounting 

The Monthly Balance Sheet 

Analyzing the Balance Sheet— From the Standpoint of 

the Financier 
Analyzing the Balance Sheet— From the Standpoint of 

the Executive 
Analyzing the Balance Sheet— From the Standpoint of 

the Manufacturer 
Availability and Value of Unified Balance Sheet 
Manager's Daily Report 

Vll 



^m?Mf 



{ 



Vlll 



CONTENTS 



Chapter 

III Purchasing and Receiving . 

Work of the Purchasing Department 

Purchase Specifications 

Purchase Requisition 

Purchase Order 

Material Receipt and Notice 

FiHng Purchase Requisitions 

Filing Purchase Orders 

Filing Material Receipt and Notice 

Special Instructions for Handhng Invoices 



IV General Stores 

Orders 
Qassification of Orders 

(A) Contract or Sales Orders 

(B) Manufacturing Orders 

(C) Production Orders 

(D) Prorating Orders 

(E) Betterment Orders 

(F) Repair Orders 

(G) Stores Orders 

Stores-Keeping 
Stores 

Requirements as to Stores 
Routine of Stores-Keeping 
General Stores Keeper 
Stores Recorder 

Bureau of Censorship of Materials 
Control of General Stores 
General Stores Record 
Classification of General Stores 

1. Office Materials — Classification 

2. Factory Materials — Classification 
Classification of General Stores — For Stores-Indexing 

The Issuing of Material from Stores 

General Stores Requisitions 
Stores Credit Memorandum 



Page 
41 



1 



57 



CONTENTS ix 

Chapter Page 

V Component and Finished Stores . . 9^ 

Nature of Component and Finished Stores 

Component Stores 

Component Stores Record 

Controlling Account for Component Stores 

Finished Stores Record 

VI Stores — Special Features .... 101 

Assembly Requisition 

Production Order Distribution of Material 

Assembly Production Order Material Distribution 

Extensions 

Daily Report of Stores Balance 

Objects of Stores-Keeping 

Stores Keeper's Order 

Goods Returned Memorandum 

Accounting for Goods Returned 

VII Preparation for the Handling of Produc- 
tion 113 

General Considerations 

Analysis of Production Handling 

Utilizing Plant Capacity 

Production and the Sales Department 

Schedule of Production 

System of Numbering 

Piece Key Card 

Part Key Card 

Unit Key Card 

Preparation and Care of Cards 

Uses to Which Key Cards Are Applied 

Drawing and Tracing Card 

Pattern Record Card 

Pattern Location Card 

VIII Analyzing and Grouping Machine Tool 

Equipment 133 

Machine Study Card 

Tool and Fixture Key Cards 



X 

Chapter 



CONTENTS 



Tool Key Card 
Tool Set-up Key Card 
Fixture and Die Key Card 
Operation Studies 
Operation Study Card 
Making the Operation Study 
Motion Study Card 
Operation Key Card 
Rate Memo 



Page 



IX Schedules . . . . . 

Purpose and Scope of Schedules 
Manufacturing Order — Master Schedule 
Production Schedule 
Purchase Order Schedule 
Scheduling Labor 

Scheduling Financial Requirements 
Importance of Schedules 
Graphic Charts 



. 149 



X Converting Labor, Material, and Expense 

INTO Finished Product .... 165 

Classification of Orders 

Production Orders 

Tracing Tag 

Issuing Material Requisitions 

Production Tickets and Daily Time Slips 

Daily Defective Repairs Time Ticket 

Daily Waiting Time Ticket 

Prorating Orders 

Daily Prorating Order Time Ticket 

Daily Non-productive Labor Ticket 

Plant Betterments and Repairs 

Betterment Orders 

Daily Betterment Time Ticket 

Plant Repairs 

Small Repairs 

Daily Repair Time Ticket 

Importance of Accuracy and Promptness 

Cost of Production 



CONTENTS 



Chapter 



XI 

Page 



Supplementary Tag 
Rejected for Scrap Tag 
Rejected for Defective Repairs Tag 
Symbolical Control Chart 
Planning Board 

XI Employment and Handling of Labor . 197 

Organization of Employment Department 

Application for Employment Card 

Letter Application for Employment 

Reference Inquiry Letter 

Requisition for Help Card 

Employee's Rate Card 

Quitting Card 

Employees Dismissed and Resigned 

Pay Period 

Time Card 

Pay Check 

Time Sheet (First Form) 

Distribution of Labor Costs 

Time Sheet (Second Form) 

Time Card (Second Form) 



XII Distributions ...... 

Organization 

Organization diart 

Factory Overhead Sheet for Distributions 

Labor 

Materials 

Expense 

Redistribution 

Record of Production, Betterment, and Repair Orders 

Production Cost Card 

Sales Analysis Sheet 

XIII Commercial or Office Accounting . 

The Function of Commercial Accounting 
General Stores under the Voucher System 
Purchase Voucher 
Charge Vouchers 
Voucher Record 



219 



241 



Xll 



CONTENTS 



CONTENTS 



Chapter 



Page 



XIV 



XV 



XVI 



Incoming Cash Sheet 

Check Record 

Petty Cash Record and Voucher 

Journal Register 

Journal Voucher 

General Ledger 

Commercial Expense Distribution Sheet 

General Commercial Expense 

Selling Expense 

Commercial or Office Expense Credits 

Analysis of Overhead 

Accounts Payable— Personal 

Controlling Accounts — Nature ; Asset 
Accounts 265 

Purpose of Controlling Accounts 
Chart of Controlling Accounts 
Classification of Asset Accounts 
Classification of Liability Accounts 
Classification of Profit and Loss Accounts 
Assets — A. Account 
Assets — B. Inventory 
Assets— C Investments 



I 



Chapter 



xiu 



Page 



XVII 



Inventory Tag 
Disposition of Tags 
Equipment Record 

The Work of the Systematizer 

Relation between Standardized Accounting and 

Systematizing 
Special Features of the Systcmatizcr's Work 
Office Appliances 



335 



FORMS 

Financial Statements and Reports 

1. Industrial Manager's Monthly Balance Sheet 

2. General Manager's Daily Report 



Page 
. 341 



Controlling Accounts — Liability 
Profit and Loss Accounts 

Liabilities — D. Current 

Liabilities — E. Reserves 

Liabilities— F. Capital, Bonds, and Mortgages 

Profit and .Loss — G. Revenues 

Profit and Loss— H. Costs 

Profit and Loss — J. Expenses 

K. Profit and Loss 

Taking the Inventory . . . , 

Preliminary Steps 
Formal Announcement 
Organizing the Force 
Classification of Assets 
Pricing the Inventory 



AND 



299 



Purchasing 
3. 
4. 

5. 
6. 
7. 
8. 



AND Receiving 

Purchase Requisition 
Purchase Order 
Purchase Order Tickler Card 
Material Receipt and Notice 
Purchase Order Numbers 
Claim Voucher 



351 



General 



317 



Stores .... 

9. General Stores Record 

10. General Stores Requisition 

11. Stores Credit Memorandum 

12. Shop Stores Requisition 



Component and Finished Stores 

13. Component Stores Record 

14. Finished Stores Record 



• 357 



. 361 



XIV 

Stores- 



contents 



•Special Forms 

15. Assembly Requisition 

16. Production Order Distribution of Material 

17. Assembly Production Order Material Distribution 

18. Stores Clerk's Order 

19. Goods Returned to Us Memorandum 



Page 
365 



CONTENTS 



XV 



Page 



Preparation for Production . 

20. Piece Key Card 

21. Part Key Card 

22. Unit Key Card 

23. Drawing and Tracing Card 

24. Pattern Record Card 

25. Pattern Location Card 



371 



Machine 



AND Tool Studies . 

26. Machine Study Card 

27. Tool Key Card 

28. Tool Set-up Key Card 

29. Fixture and Die Key Card 

30. Operation Study Card 

31. Motion Study Card 

32. Motion Study of Operations 

33. Operation Key Card 

34. Rate Memo 



Schedules and Charts .... 

35. Manufacturing Order 

36. Production Schedule 

37. Purchase Order Schedule 

38. Graphic Chart— Component Schedule 

39. Graphic Chart— Unit Schedule 

Forms Relating to Production 



377 



Premium Production Ticket, including Time on 

Premium Ticket 
Daily Day-Work Production Time Slip 
Daily Piece-Work Production Time Slip 
Daily Premium Production Time Slip 
Daily Defective Repairs Time Ticket 
Daily Waiting Time Ticket 
Daily Betterment Time Ticket 

53. Daily Repair Time Ticket 

54. Daily Prorating Order Time Ticket ^ 
Daily Non-productive Labor Time Ticket 
Supplementary Tag 
Rejected for Scrap Tag 
Rejected for Defective Repairs Tag 
Order Control Chart 
Order Control or Planning Board 



46. 

47. 
48 
49 
50 
51 
52. 



55. 
56. 
57. 
58. 
59. 
60. 



Forms Relating to Labor 



405 



. 387 



40. Production Order 

41. Betterment Order 

42. Repair Order 

43. Tracing Tag 

44. Day-Work Production Ticket, including Time on 

Day-Work Ticket 

45. Piece- Work Production Ticket, including Time 

on Piece- Work Ticket 



391 



61. Application for Employment 

62. Letter Application for Employment 

63. Reference Inquiry Letter 

64. Requisition for Help 

65. Employee's Rate Card, including Absent Record 

66. Introduction Card 

67. Change in Rate Card 

68. Change of Department Card 

69. Report of Absentees 

70. Quitting Card, including Record of Employee 

71. Monthly Record of Employees Dismissed or Re- 

signed 

72. Pay Check and Time or Clock Card 

73. Time Sheet (First Method) 

74. Time Sheet (Second Method) 

75. Pay Check and Time or Clock Card (Second 

Method) 

Organization Chart ; Distribution and Analysis 
Sheets ^^^ 

76. Organization Chart 

77. Factory Overhead Distribution Sheet 



XVI 



CONTENTS 



Page 



78. Record of Production, Betterment, and Repair 

Orders 

79. Production Cost Card 

80. Sales Analysis Sheet 

Commercial Accounting 431 

81. Purchase Voucher 

82. Voucher Tickler 

83. Charge Voucher 

84. Voucher Record 

85. Incoming Cash Sheet 

86. Check Record 

87. Petty Cash Voucher 

88. Petty Cash Disbursements Sheet 

89. Journal Register 

90. Journal Voucher 

91. Commercial Expense Distribution Sheet 



Chart of Controlling Accounts 

92. Chart of Controlling Accounts 

Inventory Records . . . . 

93. Inventory Tag 

94. Equipment Record 

Form 95. Stores Ledger . . . 



443 



445 



449 



Unified Accounting Methods for 

Industrials 



CHAPTER I 

THE DEVELOPMENT, ELEMENTS, AND RE- 
SULTS OF INDUSTRIAL OR EFFICIENCY 

ENGINEERING 

A statement of facts in connection with the 
development of accounting and industrial 
engineering, giving specific instances of the 
improved conditions brought about in various 
industries by the application, in their different 
phases, of one or both of these. 



I 



CHAPTER I 

THE DEVELOPMENT, ELEMENTS, AND RE- 
SULTS OF INDUSTRIAL OR EFFICIENCY 

ENGINEERING 

A New Profession 

During the last few years a new profession has been 
slowly developing in the industrial world, sometimes called 
industrial engineering, sometimes efficiency engineering, or 
again production engineering. While this in time promises 
to be one of the most important of the engineering pro- 
fessions, up to the present moment it has not received the 
recognition required to clothe it with the dignity of a 
collegiate degree as in other branches of engineering, and its 
importance is but dimly recognized by manufacturers in 
general, owing to the fact that the work of this new 
profession has been done under many different names, and 
by a wide diversity of individual effort. 

To trace the development of industrial engineering in 
detail would mean the writing of several books. Therefore, 
in the present instance, the primary purpose will be an 
effort to explain its scope, some of the results obtained 
by its application to industrials, the necessity that exists 
for such special service as the industrial engineer has to 
offer, and in so far as possible to establish certain standards 
for this new profession. 

Conditions Which Make Industrial Engineering Necessary 

The average manufacturer of today might be called the 
most magnificent gambler the world has ever known. He 

3 



^ UNIFIED ACCOUNTING FOR INDUSTRIALS 

is a buyer, a producer, a seller, and a financier ; and in each 
of these phases of his business he takes a hundred chances 
where his business brother, the banker, on the one hand, 
takes none, and the merchant, on the other, perhaps ten. 

This relative business worth is reflected in every 
banker's attitude toward an industrial, for, in making it a 
loan, he will almost invariably ignore fixed assets or per- 
manent investment and loan on quick assets only to the 
extent of about fifty cents on the dollar; whereas he will 
loan a merchant sometimes as high as 70% of his entire 
inventory and will take the securities of other banks at par. 

It might almost be said that banking, the world over, 
is done today under a unified code of standards, insuring 
not only safety to the banker and to the depositor, but an 
earning on investments as well. Merchandising is also con- 
ducted under a unified code of standards that minimizes the 
risk ; yet, there are somewhere near 400,000 manufacturing 
concerns in this country today whose methods of handling 
the same industrial problems are as diversified as are the 
things they make and the men who make them, and who, 
for lack of unified standards to work under, are jeopardiz- 
ing the interests of both labor and capital — and jeopardizing 
them to such an extent that it is little wonder that labor 
forms unions to protect itself, and that capital will buy 
average industrial stocks or bonds only at a big discount; 
in other words, on a speculative or gambling basis. 

In saying that a manufacturer is taking considerable 
risks, it is not meant that he does so from choice or that 
his chance-taking is directly connected with money trans- 
actions, but rather that it is due to the nature of the things 
in which he is obliged to invest his money. 

For instance, he gambles with inventions, the develop- 
ment of which is always a pure experiment. Many fac- 
tories, especially automobile factories, are today filled with 



EFFICIENCY ENGINEERING e 

obsolete materials which, sooner or later, must be charged 
to profit and loss as a result of such experiments. 

The manufacturer gambles in buying equipment, which 
may become obsolete before it shows visible wear, due to 
the development of more efficient machines for doing the 
same work. 

He gambles every time he employs a new superintendent 
or foreman, for the man's real knowledge may or may not 
be to his advantage. 

He gambles every time he takes on a new workman, 
for the man's efficiency as regards quantity and quality 
of work can only be determined by a try-out. 

And so, failing to take into his reckoning all the costs 
of these uncertainties in his business, he takes a final gamble 
by meeting his competitor's price, who in turn is doing 
exactly the same thing, with the result that sooner or 
later they are both swallowed up by industrial failures. 

It is these conditions in the industrial world that have 
given birth to the new profession called "Industrial or Ef- 
ficiency Engineering," the purpose of which, broadly speak- 
ing, is to provide the manufacturer with a unified code of 
standards to work under, which will put him on or some- 
where near the same basis as the banker and the merchant 
in chance-taking. 

Phases of Industrial Engineering 

The development of industrial engineering has thus far 
been effected not through any educational institution, but 
by two separate and distinct professions or classes of men : 
the industrial or factory accountant, sometimes called a 
systematizer ; and the mechanical engineer, sometimes 
called an efficiency or production engineer. Both are nec- 
essary to complete the work of industrial engineering, but 
neither can do very much alone, for the simple reason that 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



EFFICIENCY ENGINEERING 



the function of the former is largely analytical in its nature, 
dealing only with results as a finality, while that of the 
other is essentially creative, deaHng almost wholly with 
causes. In other words, the one enables an executive to 
measure results obtained, while the other sets into activity 
causes that make possible a predetermination of results. 
One has worked from the top down by the process of 
deduction, while the other has worked from the bottom up 
by devising means for eliminating unnecessary waste; the 
combined effort of both resulting in a standardization of 
factory operations. 

Therefore, to qualify as an industrial engineer, a man 
must not only be a master of both of these professions, 
but also be able to reconcile the necessary workings of one 
with the other. 

Principles of Industrial Engineering 

The analytical work that has been done by industrial 
engineers in the last few years has been something tre- 
mendous, and out of it have been developed certain 
principles that will go a long way toward the required 
unified code of standards. For instance, in industrial ac- 
counting, the following facts have been developed and 
standardized : 

1. That no matter what a concern manufactures, the 
elements of operation always reduce themselves to the same 
primes — namely, labor, material, and expense — and are 
therefore identical in accounting work for any and all manu- 
facturing concerns. 

2. That in principle, the accounting of investments and 
depreciation are the same in every manufacturing business. 

3. That in addition to depreciation, two accounts should 
be maintained — one for obsolete equipment and one for 
obsolete materials. 



'3 



4. That to secure uniformity of costs, repairs to fixed 
assets should no longer be treated as an expense, but charged 
to depreciation. 

5. That labor, material, and expense constitute the 
units of measure for cost of production. Therefore, the 
total monthly value of these for any plant must be converted 
into actual inventoried assets each month. 

6. That the commercial transactions of an industrial 
concern have absolutely nothing to do with production or 
the costs of production. Therefore, accountants must sep- 
arate absolutely such expenditures from the operations of 
a factory. 

7. That in addition to the usual accounts of assets and 
liabilities, there are four analytical accounts — one of profit 
and loss; one of commercial expense; one of factory over- 
head; and one of factory production. 

8. That through controlling accounts, the wide variables 
in factory overheads are distributed so as to make the costs 
of production uniform. 

9. That costs divide themselves into two distinct phases : 
those which pertain to production, or flat costs, and those 
which pertain to expense which in turn must be absorbed 
into costs of production. A careful departmental distribu- 
tion of these expenses is therefore of the utmost impor- 
tance. 

Distribution of Expense 

There is nothing that will mislead the management of a 
concern more than a lump sum prorating of expense over 
the product made, and a large percentage of industrial fail- 
ures can be attributed to this cause alone, which too often 
results in a selling of goods below cost or at no profit, as 
the following instances well illustrate : 

A large concern manufacturing automobile parts and 



8 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



kindred lines took in a great deal of outside contract work, 
especially for drop forgings and nickel-platings. They were 
always successful in getting all of the drop forging con- 
tracts they wanted, but were unsuccessful in getting nickel- 
plating contracts. The general overhead applied to every- 
thing in connection with the factory was 125%. In making 
up their estimates, this was applied to both nickel-plating 
work and drop forge work; but the real facts of the case 
were that the general overhead of the drop forge depart- 
ment, as a factory in itself, was about 190%. Using only 
125%, they were always low in their bids for drop forge 
work, and consequently secured plenty of business; while 
the reverse was the condition in the nickel-plating plant, in 
which the overhead instead of being 125% was only about 
50%. Consequently, in estimating, 125 %> always made 
the bids for this department too high, with the result that 
they could get no business. 

This illustration shows the absolute necessity for de- 
partmental overheads when outside contracts are taken into 
the factory to fill-in with in some one department. This 
particular drop forging department had done work for noth- 
ing, or at a loss, for nearly ten years before the fact was 
discovered. 

To cite another case in point, a large furniture manu- 
facturer had for years used a common overhead percentage 
on his production. As a result, when a thorough analysis 
of his business was made and a departmental overhead was 
applied, it was proved that out of over 700 pattern numbers, 
154 were being sold at an actual loss and 144 more yielded 
from none to less than 5% profit, with the result that nearly 
40% of the business done every year had been wasted effort. 
Yet, on the basis of his own figures, which spread the 
common overhead over both labor and material, everything 
had previously shown a profit. The first year after 



EFFICIENCY ENGINEERING g 

all adjustments were completed, the net profits in- 
creased 13^%. 

As another instance, a large foundry had always done 
all its costing on a *'per pound" basis. That is, the total 
expense for labor, material, etc., in the foundry was always 
divided into the tonnage obtained, and thus reduced to a 
cost per pound for the entire output. An analysis of the 
moulding work alone showed that these costs were wholly 
erroneous. For example, the cost of moulding one pattern 
weighing 200 pounds was $1.85 ; while the cost for moulding 
on another pattern of exactly the same weight was $4. The 
average of the two pieces would be $2.92 each for mould- 
ing, which would be wrong in both instances, as it would 
be too high for one and too low for the other. 

It can readily be seen how such a condition as this would 
affect estimating on job work, or costs on regular produc- 
tion. To rectify the matter, costing was put on a "per 
pattern" basis which resulted in a very marked difference in 
making estimates, and increased the net profits of the con- 
em nearly 9% for the first year. 

Unified Accounting 

In connection with accounting, all the requirements 
for an industrial concern have been standardized and 
unified by means of a set of controlling accounts which 
give a manufacturer as much detailed information about 
the operations of his factory and its output as they do about 
the operations of his sales force or the condition of his 
finances. 

These principles have been so well worked out that they 
will apply to any manufacturing plant, the only difference 
being the nomenclature required to classify the details of 
any particular business, such as (1) the kind of labor, (2) 
the kind of material, (3) the kind of expense, and, (4) the 



lO 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



kind of output that is manufactured. Any manager who has 
once learned to interpret figures from an accounting system 
based on such principles, can apply them to any other busi- 
ness, no matter how different it may be in its nature. 

The development and standardization of a unified 
method of accounting had of necessity to come first, other- 
wise the engineer would have had no way of measuring the 
actual value of economies that he might effect. Using such 
methods his analytical work has been far-reaching, and, as 
a result, he is today able to predetermine the operating 
conditions required for many kinds of industrial plants. In 
doing this, however, he realizes at the outset that in working 
toward better conditions in any manufacturing business, 
the real purpose should be to increase production per unit 
of investment and cost. This is wherein, as an engineer, 
he differs from the industrial accountant or systematizer, 
for usually the very first subject he takes up is to determine 
from the nature of the product made the equipment used, 
the labor employed, whether or not the plant is yielding 
all the output it should for the investment made, and, to 
determine this, he must first standardize the product manu- 
factured as regards kind and variety. 

Unified Output 

An analysis of present-day factories would show that 
most of them are making two or three times the variety 
of items that they should for the volume of their output; 
that in many instances they are really doing a jobbing 
business and not a manufacturing business; that they set 
up, knock down, and set up on machine tools so often 
in changing from one kind of work to another, that their 
costs of production are abnormally high, and the workman- 
ship usually poor ; that all this results in large waste through 
spoiled work and an excessive investment in small tools — 



EFFICIENCY ENGINEERING 



II 



to say nothing of the lost time of machines, which in itself 
greatly reduces the output. 

This unscientific policy is usually found in concerns that 
are dominated by a sales policy rather than a manufacturing 
one. Investment in a manufacturing business is for the 
purpose of producing some item or items that will meet 
with a steady market by virtue of merit and price. This 
can only be done by a low cost of production. Therefore, 
the first aim of any manufacturing concern should be to 
keep its investment busy every minute of the time in order 
to obtain this low cost, and any concern not doing so is 
usually dominated by an administration that has not suf- 
ficient control of its market or sales force to warrant the 
investment ; in other words, stockholders' interests have not 
been properly taken care of. 

The big money-making plant of today is the one that 
makes a small variety and a large volume of each thing 
that it produces. The concern that makes a large variety 
and a small output of each item is subject to such high 
costs of production and fluctuation in volume of output per 
item, that it can never meet the competition of those who 
manufacture on a scientific basis. Those who manufacture 
in an unscientific way are merchants rather than manufac- 
turers and use the factory, with all of its investments, as a 
servant for the sales department. 

Function of a Sales Department 

Almost any business manufacturing on a proper basis 
and making good dividends, simply uses the sales depart- 
ment as a servant to its investment, and does not allow it 
in any way to interfere with manufacturing operations after 
designs are once accepted by it. The management of such 
a factory standardizes its product, schedules it to the extent 
that will keep the investment and labor busy, and then de- 



12 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



EFFICIENCY ENGINEERING 



13 



mands of the sales department that it shall sell the specified 
output in its standard form. There is usually no difficulty 
in doing this, as such a manufacturing policy always brings 
high quality and low costs — the only two things in the world 
that can win every time in competition, provided always, 
of course, that in design and utility the product made is 
up to some recognized standard. Salesmen and sales man- 
agers are only human, and work along the lines of least 
resistance, usually with the idea that the larger the variety 
of items they have to sell, the better they can control the 
market and make sales. This may be true from their point 
of view, but when variety reaches a point where it so in- 
creases cost as to rob sales of all profit, the policy is fatal. 
Therefore, standardization of the product is the engineer's 
first problem. The result of correcting such conditions is 
well illustrated by the following examples. 

Results of a Unified Output 

In one instance a variety of 89 Items of manufacture 
was made. The annual net profits of the business averaged 
5j^%. A careful analysis brought out the fact that the 
sales on many items were so small as to make them profit- 
less. In some instances they were made at a loss, due to 
high costs of production, because of the small quantity 
made. The variety was reduced from 89 to 56 profitable 
items. The factory was put on a schedule basis of fairly 
long runs for each different piece manufactured. By this 
means, the cost of production was so greatly reduced that, 
notwithstanding a considerable reduction in sales price, 
which increased the volume of sales nearly 50%, a net 
profit of 143^ % was realized the year following. 

Another instance along these same lines was one con- 
nected with the manufacture of units of very small value, 
viz. : buttons. The concern in question manufactured about 



a thousand varieties. The introduction of an analytical cost 
system revealed the fact that out of the thousand kinds 
nearly 600 kinds were sold at absolutely no profit or at a 
loss. The total volume of business was in the neighborhood 
of $400,000 a year. The concern paid small dividends, but 
could have paid the same dividend on an output of less 
than $200,000. Improved methods of manufacture re- 
covered a profit on a little over 300 of the kinds that had 
previously been profitless, and the manufacture of the other 
kinds was abandoned. Result — a 10% dividend instead of 

Another instance and one of considerable interest, was 
in connection with a concern manufacturing bicycles and 
kindred lines. The first complaint the manager made was 
that his order department was continually in a mess and 
he wanted that straightened out first. A thorough investi- 
gation revealed the fact that (as is the custom in such a 
business) he gave a large number of options in the shape of 
tires, pedals, saddles, handle-bars, etc., on each model of 
bicycle that he made, with the result that on one individual 
model of bicycle 414 separate and distinct purchase orders 
could be made. As he manufactured several models, it is 
little wonder that his order department was in a continual 
state of confusion. The remedy was to cut out the options 
as far as possible and to standardize the entire line. By 
doing this his inventory on materials was reduced 27%, 
and for the first time in seven years the concern paid a 
dividend. 

Stabilizing Production 

Another cause for many industrial disasters is that many 
merchant managers run their factories altogether too much 
according to varying sales conditions, increasing and de- 
creasing their output and the amount of labor employed 



14 UNIFIED ACCOUNTING FOR INDUSTRIALS 

accordingly. On this account their investments are idle a 
great deal of the time, simply showing that plant investments 
have been made out of proportion to the market under 
control. More money could be made by cutting selling 
prices and keeping the investment and labor busy, because 
the difference in cost of production would make this possible. 
An instance which brings out the above facts very 
forcibly was a concern which manufactured lamps of a cer- 
tain kind as one department of its business. This department 
had lost the company $25,000 the previous year and they 
were about to abandon it. Before doing so, however, they 
called in an industrial engineer to discover, if possible, what 
was wrong. 

A careful investigation of the lamp department showed 
that the costs were abnormally high because the lamps were 
made up on order, that is, as they secured one contract 
after another. The quantities put through the factory varied, 
being sometimes very small and sometimes quite large. 
The engineer decided that, unless the volume of business 
could be increased about fourfold, it would be necessary for 
them to abandon the manufacture of lamps. 

With this information in hand, he studied out just what 
the costs ought to be, provided such a volume of business 
could be put through the factory on a schedule basis. His 
report to the manufacturers stated that they ought to save 
about 16% on the cost of production, and that by virtue of 
this reduction, they could cut their sales price 10% or 
12%. Such a cut would undoubtedly increase their sales 
up to the required amount. 

After due consideration, the concern agreed to the sug- 
gestions of the engineer, and instructed him to take hold of 
the proposition from a manufacturing point of view. This 
he did, and as an actual result made a reduction in costs of 
18%, while sales increased something over threefold, and a 



EFFICIENCY ENGINEERING 



15 



profit of over $8,000 was produced in the lamp department 
the first year. 

This same condition often exists where a concern makes 
for its own use items that are a standard in the open market. 
Their quantity requirements are often too small and the 
variety too great for economical production. 

For example, in a medium-sized concern that made 
freight cars, they had always made their own bolts. As 
they never had any cost system, they supposed, of course, 
they could make their own bolts much cheaper than they 
could buy them. A careful working out of costs showed 
that it was costing 13% more to make their bolts than to 
buy them, notwithstanding the fact that they had good ma- 
chinery for bolt-making. The reason was easily ascertained. 
The quantity was too small and the variety too great, and 
they changed so often on the machines that these latter were 
idle half the time. They never ran through more than 
4,000 or 5,000 bolts at a time; and it was found that they 
would have to run through at least 25,000 bolts at a time 
in order to make them at a cost equal to that for which they 
could be bought. 

As a result of this careful study, the management ob- 
tained outside contracts sufficient to give them the quantity 
of production needed to produce their own bolts cheaply. 

Standardizing Output 

All of the foregoing instances simply illustrate the pro- 
cess of trimming down variety; or, in other words, a 
standardizing of the things to be sold. The real standardi- 
zation of production comes in studying the possibilities for 
using as many of the same pieces or parts on different 
models or units as possible, and a careful analysis of the 
operations, equipment, and labor required for producing 
these. 



i6 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



In one instance a builder of houses designed the pieces 
and parts for a roof so cleverly that eighteen distinctly 
different roof models could be built from the same cuttings. 

In a large concern manufacturing harvesting machines, 
the inventories of raw material were reduced nearly a third 
by an analysis of this kind, which revealed the fact that 
there was not enough difference in many of the flat, round, 
and angle irons used on the various models made to affect 
them mechanically. This also applied to bolts, screws, rivets, 
and many small castings. Standardizing these parts not 
only resulted in reducing the inventory, but gave much 
larger runs in each set-up of a machine, producing marked 
economies in this way. 

In an automobile plant making three sizes of motors and 
eleven automobile models, a standardization of parts resulted 
in effecting an interchangeability of individual pieces to 
such an extent that 1,160 were discontinued. This not only 
greatly reduced raw material and repair parts inventories, 
but greatly increased the factory output and eliminated many 
of the shortage troubles. This, like the harvesting machine 
concern, was simply a case where the engineering depart- 
ment and the manufacturing department had worked on 
independent lines. Designers are not always manufacturers, 
and as a consequence do not always take possibilities of this 
kind into account. 

Weil-Balanced Equipment 

After an analysis of this kind, the industrial engineer 
takes up the study of operations to be done on the different 
pieces and parts made and the equipment available for doing 
the work, both as regards quality and quantity; and right 
here is where he runs across some very difficult problems 
to solve. 

If it were possible to get a total of idle time, and conse- 



EFFICIENCY ENGINEERING 



17 



quently investment in unused tools and equipment, it would 
be startling. The principal cause for this condition is that, 
in many lines of manufacture, various departments and the 
equipment of same are not so balanced with other depart- 
ments as to produce a uniform output. An examination 
of almost any factory would reveal the fact that many ma- 
chines are idle from half to two-thirds of the time, while 
other machines are not of sufficient capacity to meet the 
demands made on them, even by running them overtime. 

To illustrate this point more fully, an actual instance 
may be cited : 

A certain plant had a total investment of about $800,000, 
yielding an average annual output of about $900,000. In 
this plant, some of the departments and machine tools during 
certain portions of the year ran overtime and night shifts, 
while others had scarcely enough to keep them busy nine 
hours a day and many were not used an average of three 
days a week. 

Fortunately, this company had plenty of opportunity to 
expand its market, as it made only about 6% of the total 
market requirements in its particular line. Therefore, the 
expert went to work to find out what should be done to 
balance up the output and the equipment in the plant. A 
careful analysis, by operations, of the product manufactured, 
and, a detailed study of what could be done upon each 
machine, together with its capacity for doing the work 
required, showed that the factory turned out its annual 
output by running some machines eighteen months on a ten- 
hour basis; while others were required but four or five 
months on the same basis. 

Under these conditions, the problem was to shift the 
work around on different rhachine tools, to find out just 
what machinery should be bought so as to balance up the 
output, to keep all of the machine tools busy all of the time. 



1 8 UNIFIED ACCOUNTING FOR INDUSTRIALS 

and to ascertain what output could thus be obtained. This 
took the time of a number of men for several weeks, but 
the results obtained warranted the expenditure many times 
over. It was found that it required exactly $69,000 worth 
of added machinery to balance up the plant for a uniform 
output in all departments; and that by purchasing this 
machinery, the output could be increased from $900,000 to 
$1,500,000 per annum. 

This factory gives an instance where a $69,000 increase 
on an $800,000 investment produced an output 66% greater 
than was already being produced. After this investment 
was made, all overtime and night shift work was abolished. 
Looked at from another point of view, on a $900,000 output, 
the business was overinvested in by at least $275,000; and 
overinvestment is a condition in hundreds of plants today. 

Standardization of Labor 

Next, and perhaps most important of all, comes the 
standardization of labor and its application to equipment 
usage — an analytical work that is usually done under the 
name of "scientific management.*' 

In most factories, both foremen and men do work after 
a fashion of their own, according to their individual experi- 
ence and judgment, both of which vary greatly with different 
men. Consequently, there is no standard by which different 
men shall do the same kind of work so as to produce the 
same results. 

As men leave a factory, one by one, and others take their 
place, methods of doing the work vary accordingly. To 
what extent these changes take place may be readily under- 
stood by the statement that, in many lines of manufacture, 
the change in men or **labor turnover," is equal to the entire 
force annually. There are some automobile concerns where 
it equals two and one-half times the average working force. 






EFFICIENCY ENGINEERING 



19 



Consequently, the same work is subject to many different 
methods of handling in the course of a year, with the result 
that both the volume of output and the costs vary greatly, 
as does also the quality of the work done. 

The interchangeability of parts on American-made 
machinery is a well-known feature and has been brought 
about by a standardization of the various products made. 
Scientific management is now endeavoring to do exactly the 
same thing with labor. That is, it is determining methods 
which will standardize the way in which work shall be done, 
irrespective of foremen's or men's experience, so that no 
matter how much the labor factor may change in a factory, 
the work will always be done in exactly the same way, with 
the same accuracy, and with practically the same speed. The 
greatest obstacle to this work today is the instability of labor 
in general ; there is little use in taking a force of workmen 
through a course of motion study training if they are to 
leave by the time or before they get through the course. 
The first step is to insure (by establishing an incentive of 
some kind) a stability that will warrant the proposed educa- 
tion in efficiency. 

Adjustment of Labor and Equipment 

"Equipment" must also be considered in this connection. 
If observations are taken on twelve different men, operating 
exactly the same machine, on the same work, in the same 
or different factories, a surprising difference will be found 
as regards both the quality and the quantity of work done. 
To standardize it, the possibihties of the machine and its 
accessories, in the shape of tools, etc., as wtII as the operator 
who runs it, must be studied. That is, the physical motions 
of the man in handling the work and the machine, as well as 
the performance of the machine itself in doing the work 
must be carefully analyzed and synchronized. This only 



20 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



applies to the individual machine. Attention has already 
been called to the grouping of machines and the balancing of 

the equipment. 

Results of Scientific Management 

In concluding this introductory statement which is in- 
tended to give an understanding of the principles of scientific 
management and of what the work really means, a brief 
review of some actual results obtained by its application 
may be interesting. 

In a plant where steam-heating apparatus was manu- 
factured, a man had worked for years turning a certain 
piece on a particular machine. He had always been paid 
by the day, was considered a good man, and everyone was 
satisfied until an exponent of scientific management entered 
the shop to study its operations. 

Among many other operating details the work of this 
man received attention and the man, the work, and the 
machine were carefully analyzed. The man had been 
receiving $2 a day, and he turned out an average of ten 
pieces a day. In other words, it cost the company 20 cents 
a piece for labor on his work. The expert insisted that a 
great deal more could be obtained from the man and the 
machine. The superintendent did not believe it, but was 
willing to try out the suggestion offered. The expert told 
the superintendent that the work was worth about 10 cents 
a piece. The man was offered 10 cents a piece, on a piece- 
work basis, and was ready to quit his job, but the superin- 
tendent prevailed upon him to try it. 

To give the workman every chance to succeed, his work 
was laid out in a scientific manner, he was told just how to 
handle and place his work in the machine, the exact speed 
the work was to be run at, the cut that was to be taken in 
the metal by the cutting tool, etc., etc., and on the last day 



EFFICIENCY ENGINEERING 



21 



of the third week of trial, he turned out thirty pieces, making 
$3 for himself instead of $2, and the work cost his employer 
only 10 cents a piece instead of 20 cents. The man had 
literally been robbing both himself and his employers for 
years without either one of them being aware of it, which 
is a condition that exists in thousands of factories today. 

In another instance, there was to be made in a factory 
a certain part of a new gasolene engine. Both the superin- 
tendent and the foreman of the department were called in 
by the expert and asked what they thought would be a good 
record day's work for a man on that particular piece. Both 
of these men were old employees and had a thorough knowl- 
edge of the machine on which the work was to be done and 
of the man who was to operate it. After due consideration, 
their answer was, that 350 a day was the absolute limit. 

In the meantime, the expert had studied out his own 
method of handling this particular piece in processing it, 
the speed it could be run at, the changes in the shape of 
cutting tools that were necessary to remove a given amount 
of metal in a given time, what cuts should be taken first, 
and just how the work and the machine should be handled 
in every detail. Having this knowledge at hand, he im- 
mediately told the superintendent and the foreman that 600 
was to be the limit he would set on the piece. They said 
emphatically that it was impossible, but at the end of the 
seventh day the workman turned out 660 pieces as his work 
for that day, earning a bonus of 10%. 

Broader Applications of Scientific Management 

These two instances illustrate only individual and simple 
cases. It will be of interest to see how this sort of manajre- 
ment has worked out in a broader application. 

A certain manufacturer had about $300,000 invasted in 
equipment. His factory was better than the average, and so 



22 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



were his foremen and men. An increasing demand for his 
output brought him to the point where it seemed necessary 
to spend at least another $100,000 for equipment. His 
factory, however, was located in a large city, every inch of 
floor space that he had was occupied, and there was no op- 
portunity for him to purchase adjacent property for expan- 
sion. So, a move was staring him in the face. 

The manufacturer in this case knew little or nothing of 
scientific management, for always having had a good money- 
making business, he had never interested himself in such 
questions. However, the problem was a difficult one and 
he employed an expert to go into his factory. The result 
of the expert's recommendations was an increase of 33% 
in the output of the factory in a period of six months. In 
many instances the work of individual tools was doubled. 
On some it was increased 25% to 30%. The expert not 
only saved his client the $100,000 investment, but also the 
labor, power and expense that would have been required 
to run the addition to the factory afterward. In fact, he 
increased the efificiency and output of the existing equipment 
and labor to such an extent as more than to double the actual 
net profits of the business. 

In the three cases cited on the foregoing pages, there 
was unusual opportunity to apply the principles of scientific 
management. Experience has shown that some kinds of 
business are much more suited to these labor refinements 
than are others, and that the degree to which they can be 
carried depends in large measure on the nature of the 
business. It is also true that the degree of efficiency to 
which labor may be developed depends, in large measure, 
upon the stability of the labor, as well as upon the kind of 
output manufactured. For example, a certain concern em- 
ployed 2,200 shop hands regularly; yet, during twelve 
months they laid off 5,380 hands. Such instability of labor 



EFFICIENCY ENGINEERING 



23 



as this makes the ultra refinements of scientific management 
simply out of the question. 

In conclusion, one more instance may be cited to show 
the economies obtained through putting a factory and a sales 
department on a schedule basis : 

A concern manufacturing furniture handled its business 
as do all such concerns, by manufacturing according to vary- 
ing stock conditions. That is to say, whenever a pattern 
number ran low, a cutting order was put in for some quan- 
tity, according to the superintendent's or manager's judg- 
ment. Each pattern was finished up to a certain point, and 
then put into a warehouse until shipped, at which time the 
final finish was made. This resulted in three undesirable 
conditions : 

1. A large warehouse inventory. 

2. A large repair expense to stock. 

3. A large loss on "close outs" semiannually, because 

the cuttings were often greatly in excess of sales, 
and new patterns would push older ones out of 
the market. 

To correct these conditions, the line was reduced in 
variety by cutting out the small sellers ; the sales department 
was required to go over its sales records on the remaining 
patterns, and from them prepare a statement of the quantity 
it would agree to sell of each pattern each month for the 
next twelve months; and the factory was scheduled to pro- 
duce each month the sales department's estimate of sales. 

As a result of these changes, 75% of the total output 
went right to the shipping room instead of to the warehouse ; 
the inventory was reduced $55,000; $20,000 repair work to 
stock was reduced to $4,000, and the semiannual "close 
outs" were entirely eliminated. The whole plan amounted 
to a saving of about $24,500 a year and a withdrawal of 



24 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



$55,000 from investment. Furthermore, the value of the 
output was increased 23%, with the same pay-roll and equip- 
ment, by properly organizing the factory to handle work on 
the new lines. 

Many other instances could be cited, but those given will 
suffice to show how the industrial engineer is developing 
his profession, and, in a measure, to what extent he has al- 
ready obtained results. He is not merely a systematizer. 
He is not simply an accountant. To him, these things are 
only a means to an end. He analyzes, standardizes, organ- 
izes, and unifies the workings of an industry in its entirety, 
in his effort to obtain maximum production at minimum 
cost and with minimum investment. He might well be 
called "an industrial pilot to captains of industry/' 



CHAPTER II 

ANALYZING AN INDUSTRIAL MANAGER'S 
MONTHLY BALANCE SHEET 

An analytical treatment, demonstrating by 
figures what Unified Accounting does and 
its value as a controlling medium in connec- 
tion with finances, inventories, investments, 
sales, purchases, expenses, overheads, produc- 
tion and organization, together with the rela- 
tion of these to one another. 



CHAPTER II 

ANALYZING AN INDUSTRIAL MANAGER'S 
MONTHLY BALANCE SHEET 



The Work of a Manager 

An industrial manager, \n undertaking to accomplish 
certain results, should shape his organization to that end, 
assign the work to be done to the various department heads, 
and then, himself, supervise their handling of detail. That 
is the whole story in a nutshell, as to what the work of a 
manager ought to be. 

But a manager may have all the intellectual power 
imaginable, and yet, lacking the absolute facts with which 
to supervise his work, he is likely to become the slave of his 
organization, instead of its master. His departments will 
run him, instead of being run by him. The ship will have 
twenty captains, instead of one, and it will be impossible 
for him to steer a definite course to success. 

To supervise intelligently, he must have facts — absolute 
facts — concerning the operations of his business, at all points. 
Verbal information is unreliable and always incomplete. 
Special reports are frequently misleading. If he depends 
upon this kind of information to guide him in his supervi- 
sion, he is at the mercy of various department heads, and 
must not only sacrifice most of his prestige, but will fail in 
producing many possible economies, and will usually pile 
up inventories instead of dividends. 

To direct with certainty, he must be able to judge the 

27 



28 UNIFIED ACCOUNTING FOR INDUSTRIALS 

work of others not by intentions, promises, and excuses, 
but by cold, hard facts, as shown by some comprehensive 
method of measuring the results obtained by those to whom 
he has assigned the work. 

Purposes of Unified Methods of Accounting 

The unified methods of accounting which are here pre- 
sented are intended to furnish an accurate instrument for 
measuring results, in the form of a detailed accounting 
system fitted to every element in a business, and governed 
by a set of controlling accounts. The installation and opera- 
tion of such a system is usually no more expensive than 
the fragmentary systems used in most factories today; yet 
the resulting benefits will easily be recognized by any manu- 
facturer who will carefully study and apply the principles 
discussed. 

There have been many different accounting systems con- 
structed for manufacturing concerns, some of which are so 
elaborate and expensive as to be burdensome and top heavy, 
simply because they compile regularly much information 
that is never used by anyone. By these unified methods, 
however, it is often possible to trim them down to a practical 
system of accounting without sacrificing the good they may 
have accomplished and without destroying the comparability 
of the data. 

What is required of any accounting system is certain, 
definite information, every bit of which is usable and used, 
which is founded on basic principles, and all of which is so 
unified that every fact it presents is related to a common 
whole. 

The Monthly Balance Sheet 

Any manager who is giving serious thought to the 
success of his business desires first of all to know those 



ANALYZING A MANAGER'S BALANCE SHEET 



29 



factors which control not only the business, but the personnel 
of his organization as well. Nothing will give him this as 
well as an analytical monthly balance sheet. 

The manager of any large manufacturing concern should 
no more undertake to run his business without a statistical 
monthly balance sheet, than should a superintendent under- 
take to make an automobile without detail drawings. 

The balance sheets of many manufacturing concerns ap- 
pertain to little more than commercial transactions. Usually, 
where a cost system has been developed, bookkeeping is 
one thing, cost accounting is another, while production is 
treated as an incident in so far as accounting is concerned, 
and often anything like accurate information about the busi- 
ness as a whole is obtained but once a year. 

The author has devoted much time and study to perfect 
a unified method of accounting for industrials which should 
be to the manager of a manufacturing concern what detail 
drawings are to a superintendent, i.e., something definite to 
work from, and he takes pleasure in presenting the results 
of his labor in the form of a complete set of balance sheets 
(Form 1) worked out in detail, showing an entirely new 
arrangement of accounting, as obtained by unified methods, 
especially as regards factory operations and production. 
These sheets represent a unification of all cost accounting, 
bookkeeping, and general accounting into one set of con- 
trolling accounts, and give in addition the complete in- 
ventories of production as well as the costs of production. 

In other words, if a factory purchases so much material, 
labor, and expense each month, the accounting system must 
render an inventoried balance of these items, and this in 
turn must be balanced with the controlling accounts. By 
controlling accounts is meant a set of accounts that will give 
certain balances in connection with a business entirely inde- 
pendent of accounts as carried in current ledgers; in other 






30 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



words, the balances which constitute controlling accounts 
are obtained from one source and compared against corre- 
sponding amounts from the routine accounting work of 
various departments. In this way, an absolute check on the 
accounting work is obtained, as well as a control over the 
various activities of the organization. 

These balance sheets should be completed and in a 
manager's hands not later than the eighth of each month 
for the month previous. During the month a ^'General 
Manager's Daily Digest" is used, which furnishes informa- 
tion on sales, shipments, finances, purchases, labor, and 
schedules in such a way that these balance sheets in part 
are a monthly summary of the items appearing on the *'Daily 
Digest" sheet. (See Form 2.) 

These balance sheets show in detail not only what has 
taken place in the business for the month, but also gives 
comparisons from the month previous and cumulative statis- 
tics down to date for the year. They also show comparisons 
of the present year with the year previous on the same dates. 
Further, the classification and statistical comparison as a 
whole are such as will not only give any manager an oppor- 
tunity to take immediate action in planning for the future, 
but at the same time will give him control of the organization 
under his charge, as will be shown in the general analysis. 

In analyzing the balance sheets shown in Form 1 as they 
should be analyzed by the manager of the company, it 
is necessary to study them from three different points of 
view ; first, from that of the financier ; second, from that of 
the executive; and third, from that of the manufacturer. 

Analyzing the Balance Sheet — From the Standpoint of the 
Financier 

Under this caption there are four prime factors of suc- 
cessful operation to be considered : 



i 



ANALYZING A MANAGER'S BALANCE SHEET 



31 



1. The solvency of the company, determined by a com- 

parison of its assets with its liabilities, giving due 
consideration to the character of same. 

2. Its earning capacity, determined by comparing its 

total sales against gross and net profits. 

3. Its earnings as compared with the investments made. 

4. The handling of the business as a whole. 

It will be noted in the balance sheet shown in Form 1,* 
that current assets total $197,924.10; that the inventory of 
materials and merchandise amounts to $283,563.70. This 
is as far as the financier can go, because these two totals 
constitute all of the quick assets, which amount to $481,- 
487.80. Against this there are total current liabilities of 
$170,685.78. In other words, there is $310,802.02 more 
in quick assets than there is in current liabilities. A busi- 
ness of this nature would be entitled to carry liabilities to 
the extent of at least one-half of its total quick assets ; there- 
fore, there is still a borrowing capacity of not less than 
$70,000. 

The profit and loss account shows that there was a net 
profit of $14,955.63 for January, 1917, and that the net 
profits for eight months have been $72,855 which, on the 
total volume of sales for eight months ($785,804.75), equals 
9.2%. Therefore, the business as a going concern is in a 
very healthy condition, especially in view of the fact that 
the net increase in sales for the current month has been 
$42,745.14. 

The total assets, including investment in the business, 
are $859,643.16. The net profits for eight months having 
been $72,855, the business is paying at the rate of about 
13% per annum on the investments, which is very satisfac- 
tory. 

been'^ten in'ro'und^n^X'rs!'''"' "^'''' °^ *^' '"^°''"*' ^" '^'' discussion have 



i 






32 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Conservatism is shown in the management of the busi- 
ness by the fact that depreciation is charged into costs 
monthly, and that accrued dividends on preferred stock are 
not carried in Profit and Loss Account, General ; so that, 
after deducting dividends on preferred stock, the $63,532.72 
earnings in eight months are free to be applied as a dividend 
on common stock and for surplus, according to the decision 

of the directors. 

Accounts receivable have increased only $20,000 on an 
increased sale of $42,000, which indicates a healthy cash 
market. Again, current assets have increased by over 
$13,000, while current liabilities have decreased by $6,000. 
Accounts payable have increased only $12,000 as against 
an increase of $23,000 in general stores, all of which goes 
to show a strong tendency to discount purchases. 

That finances are being well handled is evidenced by 
the fact that for the eight months cash discounts and interest 
received have amounted to $14,196.60; furthermore, the 
expense in the offi.ce, covering all accounting work, has 
amounted to but $21,098.63 for the same period of time. In 
other words, the accounting department has earned about 
66^% of its own expense, or 22% of the entire general 
commercial expense; therefore, to a banker, the entire 
condition of the business would be most satisfactory in every 
way, and one in which there would be no question concern- 
ing a loan of $70,000 or $100,000 if for any reason it were 
required; and if the present volume of sales were to keep 
up, an increased investment, either of a temporary or 
permanent kind, would probably soon become necessary. 

Analyzing the Balance Sheet— From the Standpoint of the 
Executive 
When a manager creates an organization around him, 
he should not, as is too often the case, assume the responsi- 



ANALYZING A MANAGER'S BALANCE SHEET 



33 






bilities of his various department heads, or do their work 
for them, but should throw the whole responsibility on them 
and then judge them altogether by results. If the results 
are not satisfactory, he should immediately make changes 
in his organization and get men big enough for the positions. 
To be able to work on these lines he must have a set of 
controlling accounts that control not only the finances and 
investments of his business, but his organization as well. 
What is meant by this is illustrated in the following briel 
analysis : 

The manager would first check up the cashier's depart- 
ment by asking for the bank balances at the terminating 
period of the balance sheets. If they check with cash on 
hand of $25,070.20, all is well. 

He w^ould then ask the billing department for the balance 
of accounts receivable as shown on the customers ledger, 
which must check the controlling account of $120,172.80. 
If their balances agree, their work is correct. If not, they 
are in error and they must locate the discrepancy. 

The bookkeeping department is then called upon for the 
current accounts payable, which must check the controlling 
account of $109,627.68. If it does not, they are again in 
error and must locate the discrepancy. 

Next, the same inquiry applies to general stores inven- 
tory. The stores ledgers must check the controlling account 
of $112,490, and so on for all important accounts con- 
stituting liabilities and assets as shown on the balance 
sheets. 

After the heads of these particular departments have 
been found in error two or three times by a manager, the 
moral influence that these controlling accounts have over 
them is far-reaching, as it not only compels them to do their 
work right, but keeps them from defalcation of any kind. 
This in itself is worth many times what it costs to get 



34 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



information in this form, as it in a way really constitutes a 
self-auditing system. 

Reviewing further, as an executive, the work of the 
organization as revealed by the balance sheet, the next con- 
sideration is the collection department. From this must be 
obtained an explanation as to why accounts receivable past 
due have been allowed to increase $7,314 or a little over 
S0%, as shown on the balance sheet; and also why notes 
receivable have been allowed to increase $512.25. In the 
collection of these accounts, however, it is to be observed 
that accounts receivable, consigned, have decreased over 
$7,000. This, however, reflects a credit on the sales de- 
partment rather than the collection department. 

At first glance the condition in the purchasing depart- 
ment is not altogether satisfactory, inasmuch as general 
stores have increased $23,000, while factory production has 
had a slight decrease in its use of general stores. This re- 
quires information from the stores department as to what 
the items are that have caused an increase of 25% in the 
general stores inventory, and an explanation from the pur- 
chasing agent. Nominally, the general stores inventory 
should not be over 60 days* factory requirements, as most 
materials can be obtained in less time than this from the 
market. The production sheet shows that $45,000 worth 
of general stores were used for the month, which would 
make a maximum inventory of $90,000 ; whereas the inven- 
tory is seen to be $112,490, or $22,490 too much. The 
decrease in inventory on work in progress, semi-finished 
stores, and finished stores, will be taken up from another 
point of view. 

From investment under assets, it appears that better- 
ments have taken place this month to the extent of $5,442.90. 
Further, the factory production sheet shows that better- 
ments have been made for the eight months to the extent 



ANALYZING A MANAGER'S BALANCE SHEET 



35 



of $22,780. From a knowledge of factory conditions, this 
seems excessive for the current month. Therefore, the office 
manager must give an explanation as to why it has been 
necessary to expend $1,100 for office furniture and fittings 
during the current month, which is apparently an excessive 
amount. Next, the superintendent is asked for an explana- 
tion as to why it has been necessary to spend $4,342.90 for 
machinery and tools, dies and jigs, etc., during the current 
month. 

While it is true that both the office manager and the 
superintendent have an absolutely free hand in making ex- 
penditures, it is also true that they are answerable for 
exactly what they do every thirty days, and after men have 
been under such management as this for a few months, they 
think out their problems with a great deal of care before 
they make purchases of any character. 

From the profit and loss sheet analysis, the sales depart- 
ment is to be complimented, inasmuch as its net sales 
have increased $42,745.14 for the month; especially is this 
so after looking at the analysis of commercial expense, for 
while sales have increased 42%, selling expense has only 
increased 14% over the previous month. There is one 
thing, however, to see the sales manager about immediately, 
and that is the fact that sales have increased $34,762, or 
400%, on one model, while they have been reduced by over 
$20,000 on another, which is evidence that one model of 
machine is taking the place of another in the market. If 
this is so, manufacturing conditions must be immediately 
adjusted accordingly; therefore, a complete explanation of 
the means which have been adopted to increase the sales 
on this particular model is demanded. This will probably 
enable the manager to judge whether it is a permanent or 
temporary increase and whether it is local or general in its 
territorial expansion. 



36 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



The whole commercial analysis of the business, with 
some few exceptions, shows it to be fairly satisfactory from 
an executive point of view, especially in view of the small 
net increase of $1,257.50 on total commercial expense as 
compared with the total increase in sales. The only other 
point in this connection would be to take up with the adver- 
tising manager the total monthly advertising of $4,168.90, 
which could possibly be reduced for a while, in view of the 
increased sales. 

The average yearly percentage of commercial expense 
to sales is 15%. Therefore, 12.1% is extremely satisfactory 
and shows that this percentage has been reduced during 
the current month by 4.3% over the previous month. 



Analyzing the Balance Sheet — From the Standpoint of the 
Manufacturer 

There are very few manufacturers today who know 
what production they ought to get from their factories, what 
they are getting, or in what shape they are getting it. In 
other w^ords, they have no definite control over the opera- 
tions of the most important thing they have to deal with, 
i.e., their investment in plant, material, and labor. This is 
what a unified accounting system provides for, so in the 
present instance there is a long session to be held with the 
superintendent. 

The total production for the month is $110,800.57, or 
$939.37 less than it was the previous month, notwithstand- 
ing the fact that productive labor has been increased by 
$3,218, as shown on the factory production sheet, and over- 
head, by $2,101.85, as shown by the increased non-produc- 
tive labor ($1,610) and non-productive materials ($491.85) 
on the factory overhead sheet. 

The decrease of $290 in general stores and of $6,441 in 
semi-finished stores would seem to show that the produc- 



ANALYZING A MANAGER'S BALANCE SHEET 



37 



tion for the month has been obtained by an abnormal in- 
crease in labor on the work. By analyzing a little further, 
it will be seen that while the factory used $27,221 in semi- 
finished stores, it only delivered back to semi-finished stores 
$21,200, and that out of the total production $5,442 was 
charged to betterments. 

The net increase in total production, finished, however, 
was $16,188. This could only have been obtained, in this 
case, by reducing a previous inventory which had already 
had much labor applied to it, inasmuch as the previous work 
in progress was $64,000, while the net work in progress for 
the current month is only $47,000. "Assets — Inventory" 
shows that work in progress was reduced $17,127.55, semi- 
finished stores $13,021.25, and finished stores $1,814.38; 
or a total of $31,963.18, which is exactly the amount neces- 
sary to make the increased sales of $42,745, the cost of which 
is shown to be $31,963.18. 

This means that while the factory has delivered enough 
to meet sales requirements for the current month, it has 
drawn down inventories on work previously done to the 
extent of over $31,000, and consequently is that much 
behind sales in its production for the month. Therefore, 
for the coming month under present sales conditions, the 
factory would fall behind in its deliveries by something like 
$50,000, except for the fact that, as shown under assets, 
there is $47,000 work in progress, $67,000 worth of semi- 
finished stores, and $56,000 of finished stores to draw upon. 

It will not do, however, to reduce these inventories, as 
they are not even normal as it is. $56,000 represents only 
about 12 days' shipping requirements, while the inventory 
ought never to be less than 30 days' requirements. Semi- 
finished stores of $67,000 represent only a production of a 
little over 60 days, as during the current month $27,000 
was used in the factory and $7,000 was sold in parts, while 



38 UNIFIED ACCOUNTING FOR INDUSTRIALS 

work in progress is low by about $17,000; therefore, the 
condition of the whole factory has to be keyed up, as the 
inventories are all out of balance in their relation to one 
another. 

To do this, the factory must be re-scheduled ; more labor 
must be put into the departments of first operation; and 
next month's balance sheet ought to show an increase in 
the use of general stores of at least $20,000 or $25,000, in 
order to get work coming through the factory fast enough. 
Therefore, in view of this situation, it is fortunate that 
general stores inventory has been increased during the 
present month by $23,000. 

The factory overhead for the month shows 80.27%, 
which is a reduction of 1.52% for the month previous; and 
so far as this goes, it is very satisfactory. There are also 
a large number of similar details in connection with this 
balance sheet that could be analyzed, such as the percentage 
of profits on the different items sold, the percentage relation 
between depreciation and repairs, the various ratios between 
non-productive and productive elements, etc., etc. 

Availability and Value of Unified Balance Sheet 

It should be explained that both in principle and detail 
these unified methods of accounting can be applied to any 
kind of manufacturing business, according to its own par- 
ticular requirements. No matter what a concern manu- 
factures, it can only use labor, material, and expense as 
processing factors, and can only buy and sell as commercial 
factors; and the principles laid down apply. If necessary, 
inventories can always be divided up into more or less 
numerous accounts; as can also labor and material or ex- 
pense of any kind ; in other words, we can take the prime 
totals of assets, such as current, inventory, and investment, 
and divide them up into any classification that may be re- 



ANALYZING A MANAGER'S BALANCE SHEET 



39 



quired. The same may be said of liabilities, also revenue 
and costs of revenue, and so on for the other various divi- 
sions that have totals. 

The value of these balance sheets is also greatly increased 
where data from the previous year are filled in, as provided 
for in the last column, for a comparison of contractions or 
expansions in volume can then be made on a long range 
basis. Sufficient has been said to show the purpose of these 
accounting methods, their scope, and also their value to any 
executive who wants to manage a business on anything 
like a scientific basis and keep right up to the minute in his 
work. 

If any manufacturer will give the time to analyze his 
own business in the manner indicated, it will not take him 
long to determine the invaluable assistance such accounting 
methods can afford him; and the feeling of security he 
would have in handling his business by reason of being in 
absolute control of it, justifies many times over the expense 
and trouble incident to their installation. 



Manager's Daily Report 

Nothing is of more value to a manager than a daily 
report showing the relative value of sales and shipments, 
and in addition, finances, bank balances, and such other 
general information regarding agencies, number of em- 
ployees, etc., as may be necessary to him. Such a report is 
given in Form 2, which will at least offer a suggestion to 
any manager for developing a report of this character for 
any particular business. 

The arrangement of the items under sales and shipments 
should be made to correspond practically with the same 
items as shown on the monthly balance sheet, which in 
reality are a recapitulation of a general sales analysis made 
at the end of the month. 



40 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



Further information can be supplied on this report, 
such as any outstanding obligations in the shape of purchase 
orders, together with such data as "purchases made" of 
different commodities each day. Other items will suggest 
themselves to any manager according to his needs for 
information. 



CHAPTER III 

PURCHASING AND RECEIVING 



A method for making purchases and follow- 
ing them up — the recording and checking of 
all such transactions, and the receiving and 
checking of the goods purchased. 



CHAPTER III 

PURCHASING AND RECEIVING 

Work of the Purchasing Department 

While this chapter confines itself principally to the 
specifications and forms required to make purchases, refer- 
ence is made in several instances to a stores keeper and 
stores recorder, simply to show the relation between the 
purchasing agent and stores, and to evidence the fact that 
any organization must be so worked out that the general 
stores keeper may be responsible solely to the purchasing 
department : 

1. For the receiving and checking of all materials 

against original purchase orders, in such manner 
that all purchases can be checked before being 
recorded on stores ledgers. 

2. For the physical storage of materials and the de- 

livery of same to the factory at either the store- 
rooms or the factory departments, as may best 
conform to the factory requirements. 



Purchase Specifications 

To make intelligent and satisfactory purchases, a pur- 
chasing department should be guided and directed in every 
instance by specifications, as to both quantity and quality, 
for everything that is to be bought. Therefore, it is per- 
tinent to take up at this point the following facts : 

If a schedule for the making of goods to be sold has 

43 



44 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



been authorized, it should cany with it authorization to 
purchase the material, labor, and expense necessary for its 
completion. 

If a betterment or repair order has been authorized, the 
same rule applies; and if office, operating, and factory sup- 
plies have been covered by a maximum and minimum 
amount for stores, this should be a standing authorization 
for purchase up to the maximum amounts. In this way 
the manager is relieved from the tremendous amount of 
detail incident to passing on every requisition for purchase. 
Therefore, a production department should prepare and 
furnish to the purchasing department detailed specifications 
as to quantity and quality of material required for goods to 
be manufactured for sale. 

On all betterment and repair orders which have been 
O K'd by a manager, whether for the benefit of the produc- 
tion department, factory superintendent, or any other de- 
partment head, specifications for quantity and quality of 
material should be furnished by the originator of the requisi- 
tion, but perhaps should not in all instances be prepared by 
him. 

On all operating and general supplies, so far as 
practicable, standard specifications should be furnished the 
purchasing department by the factory or engineering, 
laboratories. 



Purchase Requisition 

Purchase requisitions prepared by people absolutely 
familiar with what is required as regards kinds, quantities, 
dimensions, times of delivery, etc., give the purchasing 
department an opportunity to devote all of its time to the 
buying and getting in of material on the dates required. 

Purchase requisitions should be made out in triplicate 
at least, one copy on white paper for the originator of the 



PURCHASING AND RECEIVING 



45 



requisition; one copy on yellow paper for the purchasing 
agent ; and one copy on pink paper for the stores recorder. 
(See Form 3.) 

When the stores keeper has need of materials, either to 
cover schedule requirements, to bring his stock above 
minimum, or because of a general stores requisition for 
which he cannot supply the material, he should make out a 
purchase requisition, send yellow and pink copies to the 
stores recorder, and keep the white copy himself until the 
goods are received. The stores recorder will check the 
requisition with the stores ledgers, fill in the additional data 
required, keep pink copy, and send yellow copy to the pur- 
chasing agent for execution. 

In case the superintendent, or any other person author- 
ized to do so, requires material which must be purchased, 
he may make out a purchase requisition, holding white copy, 
and send yellow and pink sheets to the stores recorder who 
will check as above and forward yellow copy to purchasing 
agent. 

This procedure applies to anything which is to be pur- 
chased, whether for a production, betterment, or repair 
order, or for general or special supplies, as in this case the 
unit of organization for handling materials is complete. 
There are, however, in very large plants or where several 
plants are controlled from one central office, reasons why a 
separate order department should be established to handle 
all planning and specification work and to control all pur- 
chase orders, but they are the exception, not the rule ; 90% 
of all industrials should be organized along the lines cited 
above. 

The manager, superintendent, or an order department, 
should O K all purchase requisitions for manufacturing or 
operating supplies not covered by maximum and minimum 
amounts, and for all materials required in excess of 



46 UNIFIED ACCOUNTING FOR INDUSTRIALS 

authorized scheduled quantities. Requisitions for all office 
supplies, printed matter, and catalogues should be O K'd 
by the manager, as should also all original contracts cover- 
ing schedule requirements. 

The purchase requisition must in every case be checked 
by the stores recorder before going to the purchasing agent, 
so that material on hand can be checked and utilized, or sub- 
stitution made if possible. He should fill in on the pur- 
chase requisition (Form 3) the ''Quantity on Hand," the 
"Quantity on Order," net "Quantity to Buy," and "Descrip- 
tion of Item — or Symbol" (symbol to be given if used) ; 
also giving "Last Price," which he obtains from his stores 
ledger. This furnishes the purchasing agent with full in- 
formation as to requirements and facilitates the placing of 
purchase orders. The purchasing agent should be furnished 
by the production department with all data relative to manu- 
facturing schedules, in ample time for him to do the neces- 
sary shopping around and contracting. 

From the foregoing it is apparent that absolutely nothing 
should be ordered directly by the superintendent or by heads 
of departments; that all purchase requisitions must be 
checked by the stores recorder; and that the stores keeper 
and stores recorder must assume full responsibility for 
goods bought and for their distribution to some other form 
of inventory. 

In this connection it must be borne in mind that the 
general stores keeper is nothing more or less than a custodian 
of the company's property and that he is accountable for its 
disposition just as much as a cashier or comptroller is 
responsible for the disposition of money intrusted to his 
custody, and that a proper system of handling general ac- 
counts for the company calls for just as close recording work 
on stores-keeping as it does for actual money. Therefore, 
no matter by whom this purchase requisition is made out, 



PURCHASING AND RECEIVING 



47 



it must first be handed to the stores recorder who will check 
it with the general stores ledger to determine whether he 
has, or has not, any of the goods required on hand or on 
order, or a satisfactory substitute; then, and then only, 
sending it to the purchasing agent, as corrected by him, to 
make the purchase. This will not only prevent overbuying, 
but will often enable substitution of material to be made for 
many kinds of small jobs. 

This mode of procedure gives the stores keeper and 
stores recorder absolute control of the quantities and 
amounts of goods that are on hand, whether as applied 
to specific requirements, or as applied to maximum and 
minimum quantities of standard materials. 

In every instance possible, the full information called 
for by the purchase requisition should be filled in for the 
guidance of the purchasing agent, as it will save a vast 
amount of time, both in letter-writing and telephone work, 
when making purchases. 



Purchase Order 

In connection with the purchase requisition (Form 3), 
the purchasing agent must be provided with a form that 
will constitute a contract for the purchase, as open order 
placing, without proposals or bids, is very dangerous and 
should never be tolerated except in an extreme emergency. 
To meet this requirement most conveniently, the form of 
the purchase order should be specific enough in its arrange- 
ment and detail to constitute a contract. 

A contract must specify quality, quantity, price, time of 
delivery and point of destination, and an understanding as 
to transportation charges. But few purchase orders would 
seem to cover these points as a regular practice. The one 
Qlustrated in Form 4 does. 

The purchase order should be made out in several copies. 



48 UNIFIED ACCOUNTING FOR INDUSTRIALS 

The first or white sheet goes to the vendor; the third 
sheet, which is pink, goes to the stores recorder ; while the 
second sheet, which is yellow, is held by the purchasing agent 
and filed by him with the yellow copy of the purchase requisi- 
tion. The fourth, blue sheet, without quantity or price, will 
be filed by the receiving clerk from which to check descrip- 
tion of materials received when not accompanied by memo- 
randum. By this color scheme the distinction of each sheet 
can be determined at sight. Pink sheets for either requisi- 
tions or purchase orders belong to the stores recorder and 
yellow sheets belong to the purchasing agent. Additional 
copies of the purchase order may be supplied the production 
department and also the accounting department so that 
invoices as they come in may be numbered and checked. 

On the bottom of the purchase order there are figures 
representing dates, from 1 to 31. These are provided 
especially for reminder purposes to facilitate purchasing 
When the purchasing agent makes a purchase which he 
wishes to have followed up, he puts a check mark on the 
date on which he expects these goods, or expects to hear in 
regard to them, and also a pencil figure above the date 
denoting the month ; thus, if a purchase was made on the 
15th day of the 6th month and the goods were not expected 
for 60 days, he would place a figure 8 over the figure 15 on 
the purchase order ; or, if in 30 days he wanted to make 
inquiry, he would in addition put 7 over the 15. 

The filing clerk makes a memorandum of this order 
number on a tickler card in the purchasing agent's tickler, 
so that on the date checked the file containing the order and 
its correspondence will be handed to the purchasing agent 
for his attention. This makes an automatic tickler system 
in connection with purchasing that does away with the 
necessity for any other kind of follow-up system. Any 
further information required for follow-up purposes can, 



PURCHASING AND RECEIVING 



49 



of course, also be shown on these same tickler cards. All 
the orders or data required to be brought up on any particu- 
lar date will be put on one card and this card will be filed 
ahead imder the index of the date required. (See Form 5.) 
The purchasing agent should also keep a perpetual price 
file. A card should be made out for each concern from 
which goods are bought and on this card one or two lines 
should be given to each of the articles purchased from them ; 
the price and date of quotation should be given after each 
article, and when any change is made in quotation, this 
price card should also be changed showing date of new- 
quotation. In this way the purchasing agent has always 
before him the price of all material according to last quota- 
tion. This would not apply to special items bought very 
infrequently. 

Material Receipt and Notice 

Having requisitioned goods and provided a means for 
purchasing them, the next step is to receive them at the 
factory. Consequently, for the receiving department a 
''Material Receipt and Notice" (Form 6) has been provided 
as the first step toward this end. All receipts of whatever 
nature should be checked, counted, weighed, and entered 
upon this receipt. Under no circumstances can the goods 
be checked from the original invoice, as their receipt must 
be invariably entered on this form. 

The material receipt and notice should be made out in 
several copies but must conform to the proper color scheme. 
The following represents its full complement and disposi- 
tion: a yellow sheet, which is to be given to the purchas- 
ing agent ; a pink sheet for the stores recorder ; a blue sheet, 
together with the goods, for the stores keeper ; a white sheet, 
when necessary, to the production department; and one 
sheet to be retained by the receiving clerk and filed in alpha- 



CO UNIFIED ACCOUNTING FOR INDUSTRIALS 

betical order under the name of the concern ordered from. 
Upon receipt of this memorandum, the purchasing agent 
should immediately send out to the stores recorder the 
original invoice. As soon as the stores recorder receives the 
original invoice for any goods, it will be his signal to bring 
together all four papers of the transaction held by him, viz : 

1. Material receipt and notice, as made out by the re- 

ceiving clerk (pink sheet). 

2. The triplicate of the original "Purchase Order" 

(pink sheet). 

3. His own copy of the purchase requisition (pink 

sheet). 

4. The invoice from the dealer. 

This method leaves absolutely no excuse for the stores 
recorder's not getting the proper count and record of all 
goods received, and it will settle all questions of difference 
that may arise as to quantity, price, etc., before entry is 
made in his stores ledgers ; in this way making the ledgers 
absolutely reliable for the items which they cover. 

It may be necessary under some conditions, such as an 
urgent demand for material, slow arrival of material, or 
non-arrival of invoices, to enter goods on the stores record 
as received before checking with the invoice, but this prac- 
tice should not be followed as a general rule. 

The purchasing agent should impress all creditors with 
the fact that invoices must be promptly forwarded so that 
they will arrive by the time the goods do; therefore, on 
the purchase order is a "Notice" for this purpose which 
reads, ''All goods are held subject to your order until we 
receive an invoice/' This means that no goods should go 
into stock until the invoice is received, so that in case of 
shortage or overage, or a lack of specified quality, adjust- 
ments can be made to cover any consignment before it loses 



PURCHASING AND RECEIVING 



SI 



its identity by being absorbed into stock or made up into 
product. 

Under no circumstances, except to obtain discounts from 
reliable firms, should payment be made on consignment of 
goods until they have been checked as indicated above. 
After this checking has been done, the purchase requisition, 
the copy of the purchase order, and the invoice, all duly 
stamped and attested by the stores recorder as being correct, 
should be immediately sent to the accounting department for 
audit and payment, a copy of "Material Receipt and Notice" 
remaining permanently with the receiving department. 

Filing Purchase Requisitions 

The factory may have requisitioned something the stores 
keeper did not have on hand; if so, the stores keeper will 
immediately make out a purchase requisition, attach the 
general stores requisition to it, and file in a temporary file. 
When the copy of the purchase order is received by him, 
he will withdraw from the file the purchase requisition 
which this covers and file them together alphabetically under 
the name of the concern ordered from. 

As soon as the original invoice for such goods has been 
checked and entered on the stores ledger, the general stores 
requisition will be honored and properly charged ; while the 
purchase requisition, copy of the purchase order, and ma- 
terial receipt and notice will be attached to the original 
invoice and forwarded to the accounting department. 

Filing Purchase Orders 

Vertical filing cabinets should be provided for the pur- 
chasing agent, and in these cabinets all purchase orders must 
be filed in serial order. As soon as a purchase order is made 
out, a file must be started, and in this file must be imme- 
diately placed with the purchase order, the purchase requisi- 



52 UNIFIED ACCOUNTING FOR INDUSTRIALS 

tion ; then all correspondence relating to this particular pur- 
chase order must be carried in the same file. When the 
goods are received, the file must also contain the material 
receipt and notice; or, if goods are rejected, the form or 
letter showing material rejected must be placed in this file, 
together with any and all other papers incident to this par- 
ticular purchase order, it being understood, however, that 
all correspondence and papers (including quotations on 
machinery and shop equipment), not connected, directly or 
indirectly, with the purchase order, are to be filed in the 
regular files under subject indexing. This will cover the 
purchasing order files both by number and by alphabet and 
in this way a central filing and mailing department can be 

established. 

The purchasing agent should have a small set of cards 

one card for each different firm, from whom the company 

buys goods— on which will appear the various dates and 
order numbers for each different purchase made of that par- 
ticular firm. For instance, the card headed "Cleveland Twist 
Drill Co.'' might have on it 6/30, 125 ; 7/5, 272 ; 7/10, 396 ; 
7/18, 987 ; each of which would indicate a different purchase 
order number and its date. By referring to the cards of 
this concern, all the papers from the "Qeveland Twist Drill 
Company" can be obtained relative to any purchases made 
from them. (See Form 7.) 

Purchase orders should be back-file referenced, i.e., if 
orders Nos. 1, 17, 27, 40, etc., have been placed with the 
Crucible Steel Company, order No. 40 should have in red 
ink in a circle in the upper right-hand corner, the number 27, 
which means that order 27 is the previous order given that 
company; and if order No. 40 is not the particular one 
sought, then order 27 will be looked at. Order 27 will 
have on it No. 17, etc. This method enables a clerk to find 
all purchase orders placed with a certain company by taking 



PURCHASING AND RECEIVING 



53 



note of the last order placed. By this means Information 
can be had as to the number of purchase orders placed with 
any one concern, and also as to the degree of regularity 
with which such purchases were made. 

Filing Material Receipt and Notice 

This receipt, as before stated, is made out in five copies 
by the receiving clerk, one copy of which is kept by 
him, one sent to the stores keeper, one to the purchasing 
agent, one to the planning department, and one to the stores 
recorder. When the purchasing agent receives this material 
receipt and notice, it is a signal for him to look up immedi- 
ately the invoice and to handle it in accordance with the in- 
structions which are given hereafter. 

As soon as the stores keeper receives his copy of ma- 
terial receipt and notice, it is a notification to him to prepare 
to receive the goods, physically or otherwise, and in many 
instances they should be rechecked by him. If the goods 
received have been specially ordered by anyone in the 
factory, his file will contain the general stores requisitions, 
and these goods should be immediately sent to fill such 
requisitions. 

The copy sent to the planning department should be 
destroyed after it has served its purpose, while the one 
to the stores recorder should be disposed of as previously 
indicated. 

Special Instructions for Handling Invoices 

All invoices, upon receipt, should go first to the account- 
ing department to be numbered and registered and then be 
immediately sent to the purchasing agent. 

The receiving of invoices in duplicate should be dis- 
couraged whenever it is possible. If a company operates 
several factories from one central point, however, it may be 



54 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



necessary to have invoices in duplicate. If they are so re- 
ceived, one copy should immediately upon its receipt be 
stamped "duplicate" in large letters across its face. 

When the purchasing agent receives an invoice from a 
shipper, he must take his copies of the purchase order, pur- 
chase requisition, and material receipt and notice, and check 
them against the invoice. If the price, quantity, and quality 
of the goods received are found to be correct, he should O K 
these in the proper places on the invoice, and immediately 
forward this invoice to the stores recorder who, as before 
stated, will recheck these papers, attach them to the invoice 
and immediately forward them to the accounting depart- 
ment. 

In the event of there being a difference in the price, 
quantity, or quality of the goods, the purchasing agent should 
make out a claim voucher, giving the exact quantity and 
quality of the goods received, also the amount of the claim, 
what it is for, and on whom it is made. He must attach 
this to the original invoice, and send it to the stores recorder. 
(See Form 8.) 

When the stores recorder receives an invoice with a 
claim voucher attached, he will enter in his Stores account 
the quantity of the goods received as designated by the 
material receipt and notice, check invoice accordingly, and 
if claim is for shortage of goods to be filled by subsequent 
shipment, he must send only the invoice to the accounting 
department. If this claim is for other than shortage, he 
will attach all of his papers and forward them to the ac- 
counting department as already described. 

When the accountant receives an invoice with a claim 
voucher chargeable to the consignor attached, he will deduct 
the amount of claim, in the deduction column, from the 
original invoice to the credit of the consignor, and charge 
the Stores account with the net quantity. If the claim 



PURCHASING AND RECEIVING 



55 



voucher is chargeable to a party other than the consignor, 
however, the accountant must then enter the amount of the 
original invoice to the credit of the consignor and charge 
the Stores account with same, and then make out a charge 
voucher to cover the amount of the claim, crediting stores, 
and charging the party designated by the purchasing agent 
for the amount of the claim. 

It can readily be seen that this not only allows for the 
immediate entry of material into stores, together with its 
price, but that there is no chance of paying the amount in 
full when there is a claim against the creditor. 

When the claim is allowed and a credit memorandum is 
received from the consignor, it must only be attached to the 
charge voucher ; no entry of it is made, in the event of claim 
being made for a shortage in shipment, as the additional 
material sent at some subsequent date must have a new 
invoice. 

Upon advice from the consignor to the purchasing agent 
that goods have been back ordered, in whole or in part, or 
if for any other reason the purchasing agent wishes to cancel 
an order and does so, copies of this cancellation should be 
forwarded to the stores keeper, production department, and 
stores recorder who will forward his copies on file for that 
order to the accounting department, marking them "Balance 
Cancelled" and giving date. 

All freight or express bills presented must be checked 
with receiving clerk's copy of material receipt and notice, 
and O K'd by him after verifying each item. As the re- 
ceiving clerk thus verifies each item of freight, he will enter 
on his material receipt and notice sheet the date of his O K 
and the date of the freight bill. The receiving clerk must 
ordinarily O K the entire bill, if correct, before the freight 
bill can be passed for payment. 

The receiving clerk should be held strictly responsible 



S6 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



for all material received by him, and for freight and express 
items O K*d by him, i.e., as to consignments, weights, etc., 
and a regular audit of the freight bills with the stores 
records should be made as with all other departments. 



CHAPTER IV 



GENERAL STORES 



Their importance, their control, and their 
relation to inventories, production, and ac- 
counting, together with a classification foe 
statistical purposes. 



CHAPTER IV 



GENERAL STORES 

The following is a brief outline of certain standardization 
work, including its nomenclature, that must be agreed upon 
or understood as a basis for factory operations, before going 
into more complete detail concerning actual instructions, 
specifications, etc., in connection with stores-keeping. 

Orders 
Classification of Orders 

Before undertaking to lay out the detail incident to 
planning and cost work in a factory, it becomes necessary, 
as a first step, to understand under just what conditions 
orders shall be issued; by what names; what relation they 
shall bear one to another ; and the kind of work covered by 
them. 

The following tabulation shows the names of orders that 
should be used in industrial work. Prefixing a letter to 
each order number will always indicate the nature of the 
order. By this means each kind of order can have its own 
serial number. 

(A) Contract or Sales Orders 

(B) Manufacturing Orders 

(C) Production Orders 

(D) Prorating Orders 

(E) Betterment Orders 

(F) Repair Orders 

(G) Stores Orders 

59 



6o 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



These seven kinds of orders should cover anything and 
everything in a factory pertaining to labor, material, and ex- 
pense. 

(A) Contract or Sales Orders 

A ^'contract" or sales order is simply a means for regis- 
tering, by name and number, the whole quantity of some 
given contract which, if too large to be put through a factory 
in total, would be divided into several production orders. 
Or, again, if too small to be manufactured ecomically, the 
sales order would be combined w^ith several other sales 
orders into one production order, so as to provide a volume 
sufficiently large to justify a schedule. (See Chapter IX.) 

In the manufacture of such a product as rifles, for in- 
stance, sales orders would naturally be large, and must be 
divided into several production orders; first, because the 
bulk is too great to put through a factory in one order ; and 
second, because from a cost point of view information for 
control of the output from week to week and month to 
month would not be obtained often enough. In other words, 
on a contract for rifles that required a year or more to manu- 
facture there w^ould not be a satisfactory control of factory 
operations during that period were it not divided up into 
orders sufficiently small to give full and complete costs fre- 
quently ; while a product like machine tools for instance — of 
which but one or two are sold at a time — might be made up 
in batches of twenty-five or fifty, either for stock or as a 
combination of sales orders, so as to get a sufficient volume 
on which to compute satisfactory costs. 

(B) Manufacturing Orders 

A '^Manufacturing Order'* is exactly like a contract 
order; simply being a means for registration and showing 
by this registration the divisions and quantities for proces- 



GENERAL STORES 



6i 



sing purposes on which it is desirable or necessary to close 
out total manufacturing costs under either one of two 
methods : 

1. By applying overhead as well as labor and material 

costs to each component — perhaps also to each 
operation, 

2. By applying overheads to each complete unit covered 

by a ^'Production Order." 

For simplicity, the latter is preferable; for accuracy and 
insurance purposes, the former is better. 

(C) Production Orders 

A "Production Order" is an order not only of registra- 
tion but also of issue; i.e., it is issued to a factory for the 
actual producing of something covered by a sales and manu- 
facturing order (except in a plant run under conditions 
whereby its product is all made for stock; in other words, 
manufactured to finished stores stock, from which the sales 
department would always draw goods). 

All sales orders are necessarily received from sales or 
executive department. All manufacturing orders are pre- 
scribed by a works manager, together with a schedule 
covering the same. All production orders are issued or pro- 
vided for by a production department, and must be in 
accordance with manufacturing orders and their schedules. 

Therefore, the production order for an individual piece 
or component would, in theory at least, be a sales order, 
say No. 1501*, a manufacturing order, say No. 1; a pro- 
duction order, say No. 1 ; plus the component symbol, say 
"26-117," the whole presenting a symbology as follows: 

"lSOl-l-l-26-lir 

This would be the complete symbology for identifying 
any and everything in connection with a piece or component 



52 UNIFIED ACCOUNTING FOR INDUSTRIALS 

with a sales order in which "1501" is the order from the 
executive office; "1/' the order from the works manager to 
the production department; and "1," the order from the 
production department to the factory to make a certain piece 

in some definite way. 

Production orders are of several classes of var>'ing 

purposes, as follows : 

1. Processing Production Order 

2. Assembling Production Order 

3. Tools Stores Production Order 

4. Prorating or Expense Production Order 

Before going further in connection with orders, an 
understanding should be had concerning the division in a 
product requiring different orders. 

A model of something is a final and complete expression 
of production. A model may consist of units, parts, and 

pieces. 

A unit is something that is operative in itself and sub- 
ject to usage on any one of several models; it consists of 
an assembly of parts and pieces. 

A part is an assembly of two or more pieces, in itself 
inoperative until assembled into a unit or model, and consists 
only of an assembly of pieces. 

A piece is an individual component processed in some 
definite form, which may be assembled into a part, into a 
unit, into a model, or into all three. 

For example, a rifle would be a model ; the lock mechan- 
ism would be a unit; and the barrel or the butt a part. 
Finally would come the individual pieces which are as- 
sembled into, or with, the foregoing. 

Therefore, a processing production order is issued to 
cover the making of individual pieces; and an assembling 
production order, for such things as constitute a part. These 



GENERAL STORES 



63 



are then closed out into component stores and an assembling 
production order issued for a unit, which might consist of 
two or more pieces or parts, and which would again be 
closed out into component stores and redrawn by a final 
assembling production order for the completion of the model. 
Again, tools that are manufactured in a tool room in 
large quantities, such as reamers, drills, cutters, screw- 
drivers, etc., are made under a stores production order, be- 
cause when completed this order will be closed and the tools 
charged to general stores, whence they are distributed to 
the factory and thus become absorbed into expense. 

(D) Prorating Orders 

In nearly all lines of manufacture there are certain 
materials used and certain work done which cannot be so 
figured as to be directly chargeable to an individual piece 
or component. By this is meant such things as plating, 
painting, enameling; or, in rifle manufacture, browning, 
heat-treating, hardening, etc. Therefore, it is proposed that 
for such items, "Prorating Orders" be issued, which will 
enable work of this character to be done for any one or for 
several manufacturing orders combined. Then the total 
expense of same for some timed period— in no instance 
longer than a month's output— would be prorated over the 
number of pieces done during that period. That is to say, 
if 15,000 pieces were heat-treated during a month, each 
component so treated would be charged with a pro rata 
amount of expense for the work, which would be in addition 
to the expense that was put upon it by the regular pro- 
duction order. In other words, this is a sort of standing 
order for all the work done by a certain operation, whether 
the operation covers a piece from one or from several pro- 

dviction orders. 

If the operation on such work as this, however, is for 



64 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



the same piece practically all the time, it would be con- 
sidered as an operation in the regular processing of the piece 
and would then come under a regular production order 
number. 

(E) Betterment Orders 

A "Betterment Order" is an order issued to a factory 
for the manufacture or installation of all items that increase 
the inventory of fixed or non-merchantable assets, or, in 
other words, investment assets — which consist of the plant 
and the things that are used in or by it in its operation. 

Betterment orders should be issued, for instance, for 
real estate additions and improvements; for the making 
of additions to buildings or building improvements; for 
the installation of all machinery; for power improvements 
or extensions, etc., etc., according to the classification sub- 
mitted below — which would be considered a standard classi- 
fication for such things; and for this reason assets are 
divided up into this classification because each item calls for 
a different percentage of depreciation, except real estate, 
which, of course, rarely ever depreciates but usually appre- 
ciates. It can be seen that this classification is laid out on 
the Dewey Decimal System plan so that a distribution by 
accounting machines, such as the "Powers," is possible. 
Therefore, it must be borne in mind that each subdivision 
must always be the same, for which the percentage of 
depreciation indicated would be written off. 

El Real Estate. No depreciation. 

E2 Buildings and Building Equipment 

E2.1 Buildings. 2 to 2y2^o per annum. 

E2.2 Building Equipment. 12 to 15%. 

E2.3 Electrical Service, outside of lighting, IS to 
20% per annum. 



GENERAL STORES 



65 



E3 Office Furniture and Equipment. 15 to 20% per 

annum. 
E4 Machinery and Tools. 7j^ to 10% per annum. 
E5 Dies, Jigs, Fixtures, and Gages. 25 to 50% per 

annum, according to their character and usage. 
E6 Power Plant. 10% per annum. 
E7 Shop Fixtures and Fittings. 25% per annum. 
E8 Patents, Patterns, and Drawings 

E8.1 Patents. According to their life. 

E8.2 Patterns. 33J/3 to 100% per annum. 

E8.3 Drawings. According to their character. 
E9 Railroad and Railroad Equipment 

E9. 1 Railroad. 1 5 % per annum. 

E9.2 Railroad Equipment. 20% per annum. 

This provides a symbology in which ''E" denotes fixed 
investment or a "Betterment Order" ; the first figure indi- 
cating the class of betterment order, and the decimals 
indicating the subdivisions. Each of these nine classes can 
be extended to cover all the subdivisions which may be re*- 
quired. Thus machinery and tools can be divided into: 

E4.1 Machines 
E4.2 Tools 

Machinery can be still further subdivided into planers, 
automatics, screw machines, profilers, etc., etc., if anything 
is to be accomplished by so doing. 

From the foregoing it is perfectly evident that there ares 
(1) for all improvements or betterments, a set of standing 
orders covered by "E" plus the number indicated; and (2) 
as repair orders can be indicated by "F," that for repairs, a 
similar set of standing orders are to be used under 'T," plus 
the number indicated; and (3) that still another set of num- 
bers can be used to cover depreciations, so that for all 



66 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



investments and repairs to same there will be no other 
orders of any kind issued. The entire arrangement is such 
that all is subject to accounting machine methods of distri- 
bution, and these same methods should be adhered to for 
all distributions required by a factory. 

Finally, it is to be understood in connection with all 
betterment orders that they should bear the same overhead 
or factory burden as manufacturing or production orders. 

(F) Repair Orders 

To repair anything is to restore it in some degree to its 
original condition; i.e., to recover a loss that has taken 
place due to usage, depreciation, etc. Based on this, in a 
modern method of accounting, reservations should be made 
for depreciation under such a combination of conditions that 
it is permissible to draw upon these reservations to pay for 
repairs. Otherwise there is a possibility of a big liability 
account being established which may, in part at least, be 
fictitious. In other words, if a certain sum of money is set 
aside to cover depreciations, and depreciations are recovered 
by the application of repairs, the money set aside for this 
purpose should be used to pay for the repairs, and not have, 
as is usual, a double expense thrust upon the business — one 
in the form of depreciation for replacements, and another 
for repairs. 

The point to be made here, however, is that the same 
classification as illustrated for "Assets," must be used for 
**Repair Orders" (F). Looked at from another point of 
view, it means that instead of having a large number of 
kinds of repair orders, they would be confined simply to 
a set of standing repair orders, classified exactly according 
to the asset classification of investments, and, as illustrated 
under ''Betterments," be carried into as fine a classification 
as desired by simply adding figures on the decimal basis. 



GENERAL STORES 



67 



The old-fashioned standing order has become practically 
obsolete. There was a time when there were standing 
orders to cover such items as were not charged to Plant 
Assets, Plant Production, and Plant Repairs ; and these con- 
sisted of such items as window washing, shop lubrication, 
shop sweeping, shop trucking, watch and fire services, etc., 
etc., all of which are absorbed into assets by way of over- 
head charges put on production. 

In fact, all old methods of accounting employed a large 
number of standing orders, some of which related to labor, 
some to material, and some to a combination of labor and 
material. Most of them, however, upon close analysis, 
lacked any possibility of placing direct responsibility on any 
one for their variation from month to month and year to 
year. 

Later and newer accounting methods have entirely elimi- 
nated the old-fashioned standing order, and furthermore, all 
the elements of manufacture have been reduced to the three 
primes : 

1. Labor 

2. Material 

3. Expense 

Therefore, all accounting work is so designed as to deal 
directly with these three items, and to do so a certain method 
of distribution must be adopted which will give the labor, 
material, and expenses of each department — at least monthly 
— divided into direct and indirect items. This has invariably 
been found to be of much more value for administrative 
action than was the old-fashioned standing order, 

(G) Stores Orders 

"Stores Orders" consist of orders placed in the factory 
for the manufacture of those items of which a maximum and 



68 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



GENERAL STORES 



69 



minimum quantity are supposed to be kept in stores. They 
have particular reference to small tools, such as drills, 
reamers, screw-drivers, taps, dies, etc., which are to be made 
up in quantity under a stores order and taken into stores 
as an asset and held there until distributed to the factory 
over properly signed requisitions. Some of these articles, 
such as screws, for instance, can be made up in one or two 
days' output in sufficient quantity to cover the requirements 
of a period of several weeks or months. 

This arrangement gives the stores keeper full opportunity 
for ordering anything that is carried in stores on a maximum 
or minimum basis, whether it is to be purchased outside or 
whether it is to be made in the factory. 

Stores-Keeping 
Stores 

No department in any manufacturing business contrib- 
utes more to its health or wealth than do the departments 
of stores-keeping, which are always three in number and 
sometimes four, as shown below : 

General stores, which cover all purchases of any kind 
whatsoever. 

Component stores, which cover all pieces and parts that 
have been completely processed. 

Finished stores, which cover all completed units or 
models ready for shipment. 

Shop stores, which cover sub-stores stations as distri- 
buting points for stores issued on a monthly supply 
basis. 

Requirements as to Stores 

Many plants undoubtedly run under what is known as 
"continuous manufacture." A contract for 240,000 units 



would mean a contract order for that many. If these are 
to be made up in a year's time, they could be divided up 
into twelve manufacturing orders of 20,000 each. 

These manufacturing orders would then be divided again 
into production orders, i.e., a production order for each 
component required, and for each assembly required whereby 
components are assembled into a complete unit. Therefore, 
on a contract order, the purchasing agent would go to 
market for materials long in advance of actual manufactur- 
ing requirements and would make contracts for such materi- 
als under specified deliveries. 

From this it can readily be seen that if it takes 30 days 
to get material from the market, and 30 days to process the 
component from this material, orders for material will have 
to be placed at least 60 days (plus some factor of safety) 
in advance of the placing of a manufacturing order in a 
factory; consequently, all terminating dates on a schedule 
for purchases should be determined at least 90 days in 
advance of the final assembly dates, specifications for which 
should be furnished by the production department. 

It will usually be necessary to have nearly all productive 
material protected by reservations, and these reservations 
will be a very important factor in stores-keeping ; therefore, 
stores balance sheets have been provided to take care of this 
in detail. 

Routine of Stores-Keeping 

In order to understand how dependent accounting is on 
a proper classification of orders, it is necessary to have a 
clear idea of what the fundamental basis of industrial stores- 
keeping and accounting is. 

All materials upon their receipt must be put into general 
stores — general stores being so broad in its scope as to cover 
everything that is purchased. Not only does it include 



70 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



material for processing and supplies for operating, but also 
everything in the shape of equipment. In other words, if a 
new machine is bought it must first go into general stores 
(at least by way of record) and be held there in inventory 
until it is delivered to the factory over a properly signed 
requisition chargeable to a betterment order, to which will 
then be added the labor and materials used for installation, 
the completion of which will transfer the entire cost to 
another form of inventory. 

The same rule applies to any piece of furniture or office 
or shop equipment which may be bought, for it is only 
by thus passing everything through general stores and 
rendering a requisition in payment for it when it is drawn 
out, that a distribution of these stores can be made either to 
production orders, assets, or operating expense, and it is the 
only basis upon which an order department can maintain 
a control of orders and their proper distribution. In other 
words, materials after going into general stores are held 
there in inventory until they are requisitioned out for some 
production order, betterment order, repair order, or stores 
order; the requisition being used simply to credit "General 
Stores" and to charge the order. Thus all production, 
betterment, and stores orders become *'Work in Progress." 

At the end of any month the total amount of the produc- 
tion and betterment orders completed are credited to 
"Work in Progress" and charged to Fixed Assets, Com- 
ponent Stores, or Finished Stores, as the case may be. That 
is to say, as material is drawn from general stores for any 
production or betterment order, it has added to it the 
labor and expenses incident to its processing operations, and 
is constantly held in inventory as "Work in Progress" by 
the use of requisitions and time tickets. Upon completion, 
the total cost of the order is credited to Work in Progress 
and charged to its proper classification. 



GENERAL STORES 



71 



By this relationship between orders, general stores, 
requisitions, and time tickets, protected by a proper system 
of names and numbers, a perpetual inventory in all stages 
of conversion between the purchase of the material and its 
transformation into something else is made possible. In 
this way all labor, material, and expense used in a factory 
are actually converted into tangible assets at the end of each 
and every month. 

Usually all the work connected with the keeping and 
recording of stores is placed under a general stores keeper 
and a stores recorder, whose duties and relations may be 
outlined briefly before going into stores-keeping in general. 

General Stores Keeper 

The attempt is often made to put the entire stores-keep- 
ing system under a production or planning department. 
Usually this is not very satisfactory, for the reason that the 
purchasing agent and the stores keeper have large problems 
in the handling of material entirely foreign to production, 
such as the buying and handling of all factory operating 
supplies and general office supplies, which are nearly always 
maintained on a maximum and minimum basis. These in- 
clude fuels, oils, waste, small tools, etc., and in addition 
thereto, equipment, furniture, fittings, stationery, catalogues, 
etc., and it must be borne in mind that all of these materials 
should be handled just as carefully as the productive 
materials. It is the physical storage, handling, and delivery 
of these materials that constitute the real work of a general 
stores keeper. 

To cover the requirements, the organization should be 
laid out in such a way that the general stores keeper and 
purchasing agent may work together as closely as possible ; 
that is, the general stores keeper should be directly respons- 
ible to the purchasing agent in so far as all general stores 



72 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



GENERAL STORES 



73 



(raw material) and their inventories are concerned, but 
should be under a works manager in everything pertaining 
to the physical conditions required in a plant for the storing 
or shelving of goods and for the physical methods to be 
employed for the delivery of goods to the various parts of 
the factory. 

Stores Recorder 

There are two methods by which a stores recorder can 
be governed in an organization — first, whereby the stores 
records or ledgers are controlled by the purchasing agent 
(which under ordinary circumstances is the usual way) ; and 
second, whereby the records and all work pertaining to them 
are controlled by a production department. 

As the general stores keeper should be at liberty to give 
most of his personal attention to the movement of stores 
as a physical requirement, there will have to be, in either 
case, a stores recorder to take care of all stores transactions 
by way of the stores ledger, to check purchase requisitions, 
to price general stores requisitions, to check invoices, and to 
make out purchase requisitions to cover maximum and mini- 
mum amounts. 

The undesirability of putting the stores ledgers and 
records in the charge of any other than the stores keeper 
and the purchasing agent, is again apparent here, for the 
simple reason that all non-productive materials and operat- 
ing supplies must be carried in exactly the same ledgers as 
productive material. However, as stores cannot be carried 
in one general stores room, but must of necessity be located 
at different points, the location of the stores recorder will 
have to be at some central point of operation, preferably in 
or adjacent to a production department, to which he can 
supply whatever information it may require. In addi- 
tion to this, the general stores keeper should have charge of 



the receiving department and have under him a receiving 
clerk in charge of such department. 

By this method of organization, the purchasing depart- 
ment is held entirely responsible for the purchase of 
material, its delivery into stores, its placing into a stores 
inventory account, and its final delivery to the factory for 
processing or usage. The responsibility in connection with 
the latter will be set forth later, but attention is here called 
to the fact that this method creates a complete unit of or- 
ganization in itself, a highly desirable thing to do if possible. 

Bureau of Censorship of Materials 

On the other hand, it is quite possible that it may be 
necessary in a plant of large size to have a "Bureau of 
Censorship" on materials, first, to cover purchasing, and, 
second, to cover withdrawals of materials from stores for 
usage ; in which case all requisitions for purchase which are 
or are not covered by a production order, betterment order, 
repair order, or maximum and minimum quantities, would 
have to be referred to the bureau of censorship for approval. 
This bureau of censorship would naturally be controlled by 
the production department. As all requisitions for the actual 
withdrawal of material from stores would be made out in 
this same department, it would be necessary to place in this 
department a stores recorder who would have charge of all 
stores transactions, as stated above. 

Under this system, foremen and all others having 
authority to do so, have to use a "request ticket," and this is 
converted into a general stores requisition by the stores 
recorder or his assistants. In so far as the accuracy of stores 
records are concerned, this plan may be as good as the other, 
but there would seem to be two undesirable things about it. 
First, the purchasing agent or stores keeper cannot be held 
responsible for the inventories of material which he has 



74 UNIFIED ACCOUNTING FOR INDUSTRIALS 

under his charge, and, second, it would seem that a great 
deal of delay in getting requisitions filled for the factory 
might be occasioned. In other words, from an accounting 
point of view it would not make any difference; from an 
organization point of view and from a delivery point of view 
it might not work so well. 

Control of General Stores 

As has already been explained, materials are bought and 
passed into general stores and held there in inventory until 
they are requisitioned out for some production order, better- 
ment order, repair order, or standing order; a requisition 
being used to credit general stores and to charge the order. 
Thus all production and betterment orders become "Work 
in Progress.'* At the end of the month, the total amount of 
production and betterment orders completed is credited to 
*'Work in Progress" and charged to Investment, Assets, 
Corr^onent Stores, or Finished Stores, as the case may be. 

Under this routine, as material is drawn from general 
stores for any production or betterment order, it has added 
to it the labor and expense incident to its processing opera- 
tions, and is constantly held in inventory by the use of 
requisitions, time tickets, etc., until the work upon it is 
completed; then credits, as cited above, are made and the 
total cost of the production order, when completed, is 
charged into Component Stores for all finished pieces or 
parts as may be required for stock, and into Finished Stores 
for all completed units. Then, Finished Stores is credited 
and Sales is charged for all goods shipped, after which the 
transactions become current bookkeeping. Therefore, from 
this it can readily be seen that it is absolutely necessary 
to keep control of materials by the proper use of requisitions, 
time-keeping tickets, and means for expense distribution, 
because the whole process is one by which all the material, 



GENERAL STORES 



75 



labor, and expense of a factory are converted into assets at 
the end of each month. 

From the above, it becomes apparent at once that, first, 
the stores keeper is the merchant of the plant ; second, that 
every requisition is a check given in payment for material ; 
third, that as in a banking business, a centralized clearing 
house must be organized to handle checks and get them 
cleared to their proper charge account. 

General Stores Record 

Theoretically, a stores record sheet has many functions. 
It is a record of all material given out, and shows for what 
purpose it is given out, etc. ; it is a perpetual inventory of the 
quantities and the value of materials on hand at any given 
time, and a perpetual inventory of the quantity outstanding 
on orders and under reserve ; it is a means for pricing all 
requisitions calling for material ; and, finally, it becomes a 
complete record of any and all variations in price, and 
furnishes chronological information as to quantities of 
material consumed for any given time. 

A thorough understanding of the means of recording 
the issue of material from stores into "Work in Progress" 
and vice versa may be derived from a consideration of the 
form of general stores record shown in Form 9, the headings 
of which are almost self-explanatory. 

It will be noticed that the heading of this sheet is made 
to show not maximum and minimum quantities (as is 
usual), but such an amount of material as will protect a 
factory's operation for whatever length of time it takes to 
get material from the market, taking into consideration res- 
ervations. Thus, the caption "When balance on hand, less 

reservation, is under , order , means 

that no reservation can be considered available in consider- 
ing the low point at which to buy, and that when the 



76 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



GENERAL STORES 



17 






quantity is down to a very low point additional quantities 
must be ordered up to some maximum point. 

If a unit of any kind is to be made at the rate of 3,000 
per day, and it takes ten days to get stock after placing the 
order, the minimum inventory at the factory would be, 
under ordinary conditions of operation, sufficient materials 
of all kinds for 30,000 units, and it would be the stores 
keeper's business to notify immediately the purchasing agent 
when the inventory on such material was down to the 
ordering point, as the 30,000 minimum would be practically 
all consumed by the time the new shipments were received. 
A factor of safety should be allowed which would perhaps 
make material for 40,000 units the low point at which to 
re-order. 

At the top of the record sheet is also shown a description 
of each item — each item being on a separate sheet. The 
unit of measure by which the item is bought is given, as 
pounds, gallons, pieces, yards, etc., and immediately under 
this is shown the location of material as to building number, 
floor number, aisle number, and bin number. In this way 
the stores recorder will have absolute information as to the 
location of any and all kinds of material, and can quickly 
and easily find or check it over if it becomes necessary. 
Further, this gives the stores recorder absolute command 
of all stores, by record, and will enable him to show location 
on requisition, so that the stores keeper can send stores 
clerks or truckmen to the proper point for the drawing of 
material to be delivered. 

In a properly arranged stores-keeping department the 
entire layout of a floor space, aisles, bins, etc., should be 
represented by a drawing or diagram. This will greatly 
facilitate the work of the stores keeper, and simplify the 
breaking in of new clerks, stock men, etc., as they are taken 
into the employ of the company from time to time. 



These stores record sheets must be Indexed under the 
classification mentioned hereafter for ready reference and 
handling, as regards posting, etc. The stores recorder 
should be held absolutely responsible for the placing of his 
requisition for purchase or manufacture (the latter in case 
of items made by the factory and carried in stock, such as 
drills, reamers, taps, dies, etc.), but not for delays in pur- 
chasing or deliveries, provided his requisition has been given 
to the purchasing department or the production department 
in time. 

The first entry on the stores record sheet will be the 
inventory at the time the sheet is opened, under the 
''Received" column, showing the date of inventory, etc.; 
following this, in the first column, ''Ordered," will be en- 
tered the date, purchase order number, and quantity. Upon 
receipt of "Material Receipt and Notice" by stores record 
clerk, he will immediately enter the amount shown on same 
in the "Received" column of the stores record sheet, giving 
date, purchase order number, and quantity; checking his 
"Material Received" memorandum, purchase order and pur- 
chasing requisition at the same time. Upon receipt of in- 
voice, these three forms will be assembled with the invoice, 
and the unit price entered in its proper place, and all papers 
then forwarded to the accounting department. This opera- 
tion will be repeated for all items received. 

As fast as requisitions are received at the stores room 
and the material is delivered, the quantity, called for by the 
requisition will be entered in the "Issued" column of the 
stores record sheet, showing the requisition number and 
date on which the material was delivered, together with the 
quantity and unit price. At the same time that this is done, 
the unit price and amount will be extended on the requisition, 
and always the balance of the quantity on hand must be 
entered in the "Balance" column. A column has been pro- 






I?* 
1- 



i1 



78 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



GENERAL STORES 



79 



vided showing "Reserved," so that no subsequent produc- 
tion order can be put into the factory demanding the same 
kind of material and obtain it, unless there is an excess of 
the amount reserved for the first production order. Under 
the "Reserved" caption the date and quantity of the reserve 
are entered, and under "For" will be shown the order number 
for which the material is reserved. As fast as the production 
order number is provided with this material, it will be en- 
tered in the "Issued" column, the same as any other material. 
Therefore, it can readily be seen that the amount available 
for any new production order will be the difference between 
the balance in stores and the total amount reserved. 

At the extreme right of the stores record sheet are pro- 
vided five columns for "Balances" ; the first column showing 
balance "On Order," the difference between the "Quantity" 
column of "Ordered" and "Received"; the second column 
showing balance "In Reserve," the difference between "Re- 
ceived" and red ink entries under "Issued" column ; the third 
column showing "Available," the difference between "In 
Reserve" and "On Hand in Stock" ; the fourth column show- 
ing, quantity "On Hand in Stock," the difference between 
"Received" and "Issued" ; and the fifth column, "Value on 
Hand," or inventory value of "On Hand in Stock." 

The unit price entered on the stores record must be the 
absolute cost, which means that all trade discounts must be 
deducted, and the net price per piece or quantity used, instead 
of the total purchase of any particular material. By this 
means this sheet becomes not only a stores record of goods 
received and given out, but also the standard price sheet for 
the use of the purchasing agent and the source from which 
the stores recorder enters on the requisition for purchase 
the last price paid and other data required. A ten days' cash 
discount, etc., should never be taken off the figures as shown 
on the invoices, as this form of discount is an earning of 



the financial department and should be credited to its ad- 
ministration and not taken into consideration in connection 
with the cost of production. 

The price to be used for any costing or inventory pur- 
poses should always be the last purchase price from any 
regular source of supply. If, however, material has been 
purchased in large quantity, or of special quality or price, 
an effort should be made by the record clerk to carry these 
prices with the quantity so purchased. 

The particular thing to which attention should be called, 
in connection with the keeping of stores and stores records, 
is the importance of keeping these records posted up to 
date — up to the minute — as to the quantity received, quan- 
tity given out, balance on hand, and prices. The value of 
this cannot be overestimated, as these records become a 
bureau of information for several purposes; first, for the 
purchasing agent; second, for the planning department; 
third, for the cost department in making costs and distribu- 
tions (as on these sheets every requisition is priced for the 
amount of material drawn over the requisition). They give 
a chronological history of each item of stores, and of the 
quantities and various kinds of materials or supplies used, 
so that in a very short time the stores keeper and purchasing 
agent can establish from this history absolutely correct maxi- 
mum and minimum quantities, and thus reduce the cost of 
investment for material to a minimum. An examination 
of these stores record sheets will always indicate to the 
purchasing agent or works manager how well purchases are 
being made and how much unnecessary investment may 
have been made in any items by purchasing in too large 
quantities. Finally, the perpetual inventory is kept checked 
against the controlling account by means of these stores 
records. 

From the foregoing it can be seen what an all-important 



8o 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



proposition the keeping of the stores records is, and particu- 
larly the keeping of these records posted accurately and 
right up to date, and with due consideration for reservation. 

Classification of General Stores 

There are two prime classifications into which general 
stores should be divided, for statistical and indexing reasons : 

(1) Office Materials, (2) Factory Materials. A com- 
plete classification for accounting and general purposes is 
given in the stores ledger shown in Form 95. 

Factory materials for such purposes are divided into 
four classes as follows : 

(a) Operating Supplies 

(b) Manufacturing Supplies 

(c) Manufacturing Materials 

(d) Equipment 

This classification is not used for keeping stores or for 
accounting work, but is used for indexing purposes; and 
also provides a means whereby statistics can be obtained 
at any time regarding the amounts of such materials used. 
These statistics are very valuable because of the fact that 
contracts are often made and prices obtained based on the 
quantities consumed of any particular commodity, and a 
little adding machine work on the stores records in connec- 
tion with this classification will always reveal this for either 
statistical or purchasing purposes. In order to make this 
classification perfectly clear, the kinds of items that would 
go into them are given below, 

1. Office Materials — Classification 

These consist of any and all kinds of supplies for office 
work, for recording and accounting work, advertising 



GENERAL STORES 



8l 



matter, etc. This kind of material should be classified on the 
indexes for stores-keeping about as follows : 



Advertising Matter 
Bands, Rubber 
Baskets, Waste 
Blotting Paper 
Brushes, Typewriter 
Carbon Paper 
Clips 

Copy Paper 
Envelopes 
Erasers, Pencil 
Erasers, Typewriter 
Forms, Cards 
Forms, Loose-Leaf 
Forms, Printed 
Inks, Stamping 
Inks, Writing 



Ink Wells 

Letterheads 

Pads, Scribbling 

Paste 

Pencils 

Punches 

Pen Holders 

Pens 

Pins 

Ribbons, Typewriter 

Rulers 

Second Sheets 

Shorthand Books 

Stamp Pads 

Trays, Letter 

Twine, etc. 



2. Factory Materials— Classification 

These, as stated above, are divided into four classes for 
indexing purposes only, the first of which is: 

(a) Operating Supplies. These consist of all such 
supplies as are used for operating, or making repairs to the 
plant or to the machinery in the plant, and will consist of 
about such a classification of items as given below, although 
it must be borne in mind that there are items in this classi- 
fication that might be used as productive material. 



Asbestos 

Babbitt 

Belting 



Materials 

Brooms 
Brushes, Air 
Brushes, Motor 



82 UNIFIED ACCOUNTING FOR INDUSTRIALS 



GENERAL STORES 



83 



Carbon 


Packing 


Compounds 


Piping 


Electrical Supplies 


Plumbing Supplies 


Emery Cloth and Paper 


Potash 


Excelsior 


Rivets 


Fuels 


Rope 


Gaskets 


Rubber 


Glass 


Sandpaper 


Glue 


Soap 


Inks, Office 


Tin 


Iron, Galvanized 


Toilet Paper 


Leather, Lace 


Twine 


Nails 


Waste 


Oil Cans 


Wax 


Oils 


Wire 


Tools — Small and Hand 


Bits 


Handles 


Checks 


Jigs 


Chisels 


Knives 


Dies 


Miscellaneous 


Drills 


Soldering Irons 


Emery Wheels 


Stones 


Files 


Torches 


TTammers 


Wrenches 



(b) Manufacturing Supplies. These will consist of all 
kinds of material that are used in the product made for sale, 
and measured out in quantities in such a way as not to be 
chargeable to any specific piece, part, or unit, for the reasons 
that it would be almost impossible to measure the exact 
quantity used in or upon any individual part. This kind of 
stores is often drawn out in bulk, such quantities being used 
as are required, and the remainder returned to stores on a 



credit memorandum ; for it is impossible in many instances 
to specify the exact amount of material needed. The fol- 
lowing items indicate the nature of the articles that go into 
this classification: 



Alcohol, Spirits 


Screws, Machine 


Alcohol, Wood 


Shellac 


Oil 


Tape 


Paints 


etc. 


Putty 





(c) Manufacturing Materials. These consist of all 
materials which are used in the actual product made for 
sale, and which are charged directly to piece, part, unit, etc., 
or to a production order in its entirety. 

Properly speaking, both manufacturing supplies and 
materials are one and the same thing; but the reason for 
recommending a subdivision of these two is that it is neces- 
sary to exercise a great deal more care with manufacturing 
supplies than it is with manufacturing materials in issuing 
them to the factory, since the exact quantity of the former 
required for a given production order is frequently not 
specified or limited. 

(d) Equipment. For indexing purposes, this consists 
of all such equipment and machinery as is bought for the 
plant, and not, as yet, charged out to the plant under a 
betterment order. 

Classification of General Stores— For Stores-Indexing 

It is almost impossible to provide at the start every item 
of classification that will be required ; but a general scheme 
should be adopted which may be added to from time to time 
as classifications for inventory become necessary. It is 
preferable to classify primarily under the kinds of materials 
used, for two reasons : it makes the handling of the stores 



84 UNIFIED ACCOUNTING FOR INDUSTRIALS 

record sheets much more rapid, and at the same time it gives 
a statement every month of the consumption of the various 
kinds of materials that are used. 

As before stated, general stores are divided into two 
prime classifications: (1) office materials, and (2) factory 
materials, which are the same for both stores-indexing and 
statistical purposes. The subdivisions of these two classes 
are as given below: 

Office Materials. Subdivision same as already given. 

(See pages 80, 81.) . 

Factory Materials. For purposes of stores-indexing, 
these materials should be classified about as follows ac- 
cording to the kind of material and the items made of that 
material : 



I. Brass and Bronze 

Castings 
Cocks 

Cups, Grease 
Cups, Oil 
Sheet 
Rod 

11. COMPOUNM 

Commutator 

Cutting 

Drilling 



Screws 

Valves 

Washers 

Wire 

Miscellaneous 



Polishing 
Miscellaneous 



III. Copper 

Sheet 
Tubing 
Wire 
Rivets 



Washers 
Castings 
Miscellaneous 



GENERAL STORES 



85 



IV. Emery 




Cloth 


Wheels 


Powder 


Miscellaneous 


V. Fibre 




Rings 


Gaskets 


Disks 


Miscellaneous 


VI. Fuel 




Coal 




VII. Glass 




Disks 


Window 


Tubes 


Miscellaneouii 


VIII. Iron 




Bar 


Sheets 


Bolts 


Screws 


Castings, Gray 


Tubes 


Castings, Malleable 


Washers 


Forgings 


Wire 


Nails 


Miscellaneous 


Rivets 




IX. Stf.f.l 




Shafting 


Tool 


Sheet 


Tubing 


Bar 




X. Lumber 




Boards 


Timber 


Planking 


Miscellaneous 


XL Oils and Grease 




Lubricating Oils 


Greases 



86 UNIFIED ACCOUNTING FOR INDUSTRIALS 



XII. Packing 




Asbestos 


Metallic 


Gaskets 


Wick 


Hemp 


Miscellaneous 


XIII. Paper 




Books 


Stationery 


Catalogues 


Wrapping 


Circulars 


Sand 


Drawing 


Miscellaneous 


Printed Form 




XIV. Rubber 




Diaphragms 


Seatings 


Gaskets 


Sheet 


Hose 


Tubing 


Rings 


Washers 


XV. Leather 




Belting 


Washers 


Lace 


Miscellaneous 



The Issuing of Material from Stores 
General Stores Requisitions 

Form 10 is to be used for the purpose of obtaining 
material and supplies from stores, as no items of whatso- 
ever nature bought by the company should be issued by the 
stores keeper except over this form properly signed. The 
production department will issue all requisitions for materials 
needed for regular production orders, but not always for 
supplies for operating the plant. The requisition must, 
under all circumstances, show the order number to which 
the material is to be charged, as well as the number of the 
department which draws the material. Where materials for 



GENERAL STORES g^ 

operating supplies, etc., are drawn, which are not covered 
by any production, betterment, repair, or standing order 
number, the requisition must, without exception, show the 
department drawing the material and must be properly 
signed by the head of that department. Under no circum- 
stances can the head of one department use his requisition 
to draw material from another department, or from the 
inspectors ; through general stores only will it be honored. 
In every instance the quantity and kind of material must 
be plainly set forth upon the requisition as follows : 

L Material, symbol, and number of requisition. 

2. Charge number or order number which is entered 

against the proper class of order as shown on the 
requisition. The symbols shown thereon desig- 
nate the following classes of orders : 

(A) Contract or Sales Orders 

(B) Manufacturing Orders 

(C) Production Orders 

(D) Prorating Orders 

(E) Betterment Orders 

(F) Repair Orders 

(G) Stores Orders 

3. The quantity designated and a clear description of 

the article. 

4. The department to which delivery is to be made and 

the time when delivery is required. 

5. The signature of a duly authorized party. 

6. The date on which made out. 

Exceptions may be made to this rule in the case of the 
manager and any superintendent, by allowing them to use 
their respective pads, which should be especially assigned 
to them by a key number, as they find it necessary. When 
this is done the requisition must be O K'd by the superin- 



88 UNIFIED ACCOUNTING FOR INDUSTRIALS 

pTooIrlv 'if '^"^""'T' '°' ^^'^'^ '""^ '"^'^"-1 - drawn 
W oJth T' '"^ ' ''^•^'' n^emorandum made out in 

and Z f r'""'"' ^'""^ ''^^'^ 'h^ ""^'^ri^l was taken 
and this must be attached to the requisition 

stores Cer'is^r' '" "!!"'' '' P^'^'^"^^^ ''''''^' '^^^ the 
bouS A ^.l . '""■'''""' °^ *'^^ P'^"t' that everything 
bought by the factory is put into his custody to be so d Z 

h.m to the various departments, and that these requst^ons 
are nothmg more or less than checks made out and 7^Z 

and a, he" " ''' T"^'^*"" '^ "°' Properly' made out 

th,/V' 7'"''" '^^' '^' ''°''' ^''P'' should bear in mind 
that his department must be conducted as an ab oSv 

mdependent business; he buys goods over his purcha e ' 

quisuion. and sells these goods to the facto" ove, s 

gnera stores requisitions. Every night his sJock shouH 

atltatr "'' '' '' '' ""• '' ^' '^ ^ ^^^^ -ictly 

chart callS "sT '' r' "'"'"' '' '''''''' '''''^' *« have a 
Chart called Stores Location Chart." so that the stores 

re order can accurately route each requisition by entering 
this .nformatxon in the space provided on the form ^ 

out nduXatr rr?' '''' *'"^ "^"'^'*'°- ^^ -de 
out m duplicate. The stores recorder will be either located 

n. or adjacent to, the planning department. All requisitions 
for production material will be accompanied by a roudn^ 

ag which should be attached by the st'ores kee^r to tch 
lo of material called for by a requisition. C^all ofh^ 
materials, such as operating supplies, etc., which mth be 

equisitioned direct by department heads, the storeTkeeper 
should put a routing tag on the material toTs pX 
destination which, of course, will be indicated on the requfs 



GENERAL STORES 



89 



tion Itself. It IS a much safer way to route material than 
It IS to make duplicate requisitions which cannot be fastened 
or tied to the material in any convenient way. 

Stores Credit Memorandum 

Form 1 1 is to be used by all heads of departments for 
creditmg any department with materials drawn from stores 
which It cannot or does not use, and which are returned to 
stores. It must be borne in mind that all material drawn 
over a requisition is charged up to its proper order or account 
number immediately after it is taken from the stores depart- 
ment, and if subsequent work or operations show too much 
material has been drawn, or defects are discovered in the 
material, this form is used to give a credit to the job. For 
this purpose it is immediately sent to the stores keeper 
together with the surplus or rejected materials. Unless the 
material accompanies this credit memorandum, the stores 
keeper will not accept it, for he must get his material back 
mto stores before he can apply the credit. The credit 
memorandum must be signed by the planning department 
or a department head authorized to do so, and also by the 
stores keeper, before it is turned over to the stores recorder, 
where the material must be priced exactly the same as in the 
requisition, be entered on the received side of the stores 
record, and, under 'Trom Whom," the production order 
number be entered in red ink. 

^ This stores credit memorandum is of as much importance 
in the handling of stores as is the requisition, these two 
kinds of forms constituting the debits and credits in so far 
as general stores-keeping and the factory are concerned 
For example, if 100 bolts are drawn out of general stores 
tor a production order and 10 of them are found defective, 
10 more bolts will be drawn out on another requisition ac- 
companied by a credit memorandum for 10 bolts, and the 



90 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



10 bolts drawn out on the second requisition will be charged 
off by the record clerk to either "Scrap" or "Defective 
Pieces," so that by this means the balance of his stores 
record sheets will always check his stock, and at the same 
time dispose of any defective material. 

Again, the tool room might draw out on requisition a 
dozen \2" flat files. Immediately afterwards another fore- 
man might present a requisition for these files, and, there 
not being any in stock, he might be given six of the files that 
had been taken out by the tool room. In such case the six 
files would be passed back into general stores from the tool 
room by a credit memorandum, and the requisition from the 
other foreman changed to six and turned into stores ; thus 
leaving six files charged to each department. It must be 
borne in mind, however, that these transactions must not 
take place between departments, but through the stores de- 
partment as a clearing house. 

These stores requisitions and credit memoranda can 
both be used in conjunction with component stores in the 
same way as they are with general stores, if desired, but 
it is much better to use for this purpose a combined form 
headed "Component Stores Requisition and Credit" but 
otherwise bearing the same data. 



CHAPTER V 

COMPONENT AND FINISHED STORES 

Showing how they differ from general stores 
both in character and their method of record; 
together with a discussion of their inven- 
toried values, their control, and their relation 
to accounting. 



CHAPTER V 



COMPONENT AND FINISHED STORES 



Nature of Component and Finished Stores 

When material is issued to the factory for the manu- 
facture of pieces or parts, it is charged to a production order 
covering same; and the amount of material, as well as the 
labor on this production order, is charged up to a controlling 
account called **Work in Progress," where it remains until 
the entire production order is completed. When the pro- 
duction order is finished, "Work in Progress" account is 
credited, and "Component Stores" is charged. Here the 
item remains in inventory as "Component Stores" until 
withdrawn again for assembling, where it will be charged 
against "Work in Progress" until this assembHng produc- 
tion order is completed, when "Work in Progress" will 
again be credited and "Finished Stores" charged. Here it 
will remain until sold, when "Finished Stores" will be 
credited and "Sales" charged. In this way the controlling 
accounts give the summaries of perpetual inventories, as it 
can readily be seen that at the end of the month any uncom- 
pleted orders must necessarily be in "Work in Progress" 
and all completed orders must be in either Component or 
Finished Stores. 

Now, it should be borne in mind that no items other than 
those processed by the factory itself should be included in 
the classification of "Component Stores" or "Finished 
Stores," for if this is done there is no check on inventory 
records as related to production orders, or no distribution 

93 



UNIFIED ACCOUNTING FOR INDUSTRIALS 
94 

of a proper amount of overhead to production orders. There- 
fore it is worth while to say again that such things as 
screws, nails, bolts, wire, or any finished parts bought out- 
side, do not, under any circumstances, become identified with 
component or finished stores records ; they are simply C^en- 
eral Stores." Even if parts for a unit or model of any kind 
should be bought, they would be general stores until drawn 
into the factory by some production order, which would 
convert them into "Work in Progress." 

Component Stores 

Component stores do not include any component parts 
or pieces in progress, and, until a piece or part is fimshed, 
it is still *'Work in Progress." When, however, this piece 
or part is finished and in such shape as to be carried m stock 
for assembling purposes, it then becomes "Component 
Stores " Therefore, these component stores bear no rela- 
tion to general stores or to finished stores, simply bemg a 
necessary transformation convenience in accounting for 
factory operations. Component stores should be directly 
in charge of the production department and be replenished 
and drawn on in accordance with instructions issued by this 
department to the factory for making up finished umts or 
models as called for by some schedule or schedules. 

As component stores are the result of having processed 
certain pieces and parts on some particular production order, 
they must be costed out on a separate production order in 
order to get the final cost of the different units in which 

they may be used. r .^^ { 

This method of procedure is carried still further for 
the reason that costs must be divided not only into umts, 
but into parts of units; and parts, into pieces and operations 
on these pieces and parts. Therefore, a manufacturing order 
calling for the production of any given unit or number of 



COMPONENT AND FINISHED STORES 



95 



units is converted into production orders for the various 
parts and pieces required. 

The principal reason for this procedure is on account of 
sub-assembly; one example of which might be the lock 
mechanism of a rifle. This is composed of a certain number 
of pieces, which, when assembled into the lock mechanism, 
constitute a unit, inasmuch as it can be assembled and be- 
come operative independent of the model upon which it 
goes and, under certain circumstances, may be used on 
several models of rifles. Therefore, the pieces that make up 
this part should be assembled into it under a production 
order for assembling separate from the one covering the 
general assembly of rifles. 

Component Stores Record 

The "Component Stores Record" (Form 13) is to 
component stores exactly what the "General Stores Record" 
is to general stores; viz., a record of all pieces and parts 
processed in a factory, taken into stores, and then delivered 
to assembly orders. It shows also inventory values of com- 
ponent stores whenever it is necessary to have such informa- 
tion. The entries in the component stores record are similar 
to those found in the general stores record, and likewise are 
governed to a certain extent by maximum and minimum 
amounts. 

To illustrate this point, if a sales department were re- 
quiring, say, 30 engines a day of a particular model, the 
minimum inventory of that engine in finished stores would 
be determined by whatever length of time it takes the factory 
to assemble that kind of an engine. If this time wTre 10 
days, the minimum inventory on finished stores would be 
300 engines. 

To go a step further, if four of a particular piece were 
required to an engine and 30 days were necessary to get 



96 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



the piece through the factory, then the minimum in com- 
ponent stores would be four times 30 for each day, and for 
'30 days, 30 times this number, or 3,600 pieces. This same 
comparison would apply to all articles of manufacture, such 
as rifles or similar weapons, wherein a complete model is 
composed of an assembly of several parts, some of which 
are duplicate parts. 

When any finished pieces or parts are received in stores 
from "Work in Progress" in the factory, they should always 
be accompanied by a tracing tag, showing production order 
number, lot number, and net quantity received. As soon as 
it is received by the stores keeper, he should enter on this 
tracing tag the actual count of the goods received, date, 
and sign same, and then turn it over to the stores recorder 
who will immediately post to his stores record under "Re- 
ceived" the quantity specified, with the order number upon 
which it has been made. 

This material will usually be received in the stores as 
only a part of some production order; that is to say, there 
may be a production order in the factory for 10,000 pieces, 
and these may come into component stores in lots of 2,000 
or 3,000. The entries for such receipts must be made in the 
column captioned "Received on Unfinished Order," for the 
reason that goods received in instalments in this way have 
not as yet been costed out, and consequently must be held 
in this column until the cost is known, which will be upon 
the completion of the production order. 

When pieces on uncompleted orders arc entered in the 
column "Received on Unfinished Orders," the quantity is 
also added to the balance in the column headed "Balance 
on Hand— Unfinished Orders," given on the outside. It 
may be that several instalments of finished parts or units 
will be received into component stores before the entire 
order is completed ; but, as soon as the total order and cost 



COMPONENT AND FINISHED STORES 



97 



of the order is received, the total quantity made on the 
order is extended to the column "On Hand — Component 
Stores," and the cost price is entered as above. 

When the stores recorder receives a requisition calling 
for component stores and these have been delivered, he will 
enter in the "Issued" column the date of issue, order num- 
ber for which the material is to be used, together with the 
quantity. The amount is then extended to "Balance on 
Hand — Component Stores" and the inventory value is then 
carried out at once. 

In the event of its being necessary to give out component 
stores that have been received on an unfinished order, the 
order number and the quantity are entered in exactly the 
same manner as above, and the quantity is deducted from 
the "Balance on Unfinished Orders," as there is no balance 
in "Component Stores"; for, as stated above, although the 
goods may be received into the component stores department 
in instalments from some production order, they cannot 
become "Component Stores" as a matter of record, but will 
remain "Work in Progress" until the costs are ascertained 
and closed out. 

It may be necessary at times to draw from both "Balance 
in Component Stores" and "Balance on Unfinished Orders." 
To illustrate this, suppose a requisition calls for 3,000 parts 
and there are 1,000 parts in "Balance in Component Stores," 
while there are 4,000 in "Balance on Unfinished Orders." 
Obviously, all there are of component stores, which is 1,000, 
will be taken, and the difference must come out of the "Bal- 
ance on Unfinished Orders"; and, if it becomes necessary 
to price all that are drawn out, the price for the number 
taken from the "Balance on Unfinished Orders" must be 
the last cost price, but this should never be resorted to except 
for special purposes. 

When costs of any parts which are carried in "Balance 



u 



98 UNIFIED ACCOUNTING FOR INDUSTRIALS 

on Unfinished Orders" are received, the quantity should 
then be transferred to "Balance in Component Stores," to- 
gether with unit prices, total values, etc. 

Controlling Account for Component Stores 

In the controlling accounts of a company, there should be 
an account which governs "Component Stores"; and the 
aggregate inventory value, as shown by the component 
stores record, should at any time practically agree with the 
controlling account, from which it will be noted that a check 
is thus kept on the inventory from two separate and inde- 
pendent sources. 

In first establishing any such inventory, conditions may 
be met which will make it almost prohibitive to maintain a 
minimum inventory on account of the demand for parts for 
assembling purposes. Therefore, it may become necessary 
to draw a large part of assembling requirements from com- 
ponent stores on unfinished orders. 

In order to maintain a controlling account properly, and 
have the monthly balance sheet a true interpretation of in- 
ventory conditions governing component stores, the stores 
recorder, at the end of each month, should draw off from 
his records all parts issued from stores on unfinished orders 
and enter the same on the component stores record in red ink 
under the column "Balance on Hand — Component Stores." 
This red ink balance will indicate a delivery to component 
stores, which, in so far as regular records are concerned, is 
not yet recorded as received in component stores, and will 
not be so recorded until the entire production order is com- 
pleted. The stores recorder should also draw off, at the 
end of each month, all finished stores issued as unfinished 
orders. A memorandum entry should in both cases be 
shown in red ink on the monthly balance sheets, but must 
not be actually entered on the balance sheets of private 



COMPONENT AND FINISHED STORES 



99 



ledger accounts, as would be the case where a production 
order was completed and the entire cost charged to stores 
and credited to "Work in Progress." 

The purpose here is to create temporarily a credit to 
"Work in Progress" of such items as have been used in 
some other form of inventory. Otherwise, any units finished 
on an uncompleted assembly production order that were 
sold and shipped would still be in the "Work in Progress" 
inventory, and also in the accounts receivable, thus creating 
double value on inventory as a whole for such items. 

What has been said above as regards unfinished balance, 
is absolutely necessary in connection with the keeping of 
finished stores ; but in connection with component stores, the 
regular form of general stores record could be used, by 
sacrificing accuracy and always using last cost price obtained 
on issue of any component stores, making a new price when- 
ever a production order was closed out. 

Finished Stores Record 

The keeping of this record (Form 14) is identical with 
that of component stores, inasmuch as all the receipts from 
production orders are entered in the "Received" column, 
and everything given out on a shipping order (instead of a 
requisition or a production order) is entered under "Issued." 

In the issuing of shipping orders, two copies should 
always be given to the shipping clerk, one a shipping memo- 
randum, returnable to the accounting department for billing, 
and the other a shipping memorandum to accompany the 
shipment to the consignee. These are the only papers he 
should have for the shipment of goods. 

On the shipping memorandum returnable to the account- 
ing department, provision should be made for the entry of 
the cost of all the items shipped on finished stores, as these 
figures are necessary for making a sales analysis. 



I 



CHAPTER VI 

STORES—SPECIAL FEATURES 

Illustrating forms to be used as a check on 
materials drawn against orders, and explain- 
ing in detail the stores keeper's responsibili- 
ties in ordering goods made in the factory, 
and his procedure in disposing of returned 

goods. 



CHAPTER VI 



STORES— SPECIAL FEATURES 



Assembly Requisition 

Duplicate requisitions are used in requisitioning ma- 
terial for assembly purposes. One, a blue sheet, for the total 
list of material required to cover specified lots on a given 
production order, will be filled in, in the first two colimms 
only, showing the number of pieces or parts required, and 
the piece or part number, together with the date and pro- 
duction order or lot number at the top. (See Form 15.) 

The assembly requisition, filled in as described, is turned 
over to the stores keeper, who immediately proceeds to fill 
the requisition. Owing to low balances on hand in stores, 
however, he may frequently be unable to make complete 
delivery of all the parts called for. Therefore, the duplicate 
of the assembly requisition, a pink copy, has been pro- 
vided to take care of these "Shorts." As soon as the stores 
keeper gets out and delivers to the department requiring it, 
what material is available, he enters under "Delivery" on the 
blue sheet the date and quantity delivered. When the sheet 
or sheets covered by this requisition are thus filled out, the 
stores keeper checks on the pink sheet the quantities of 
each part still undelivered, as shown by the blue sheet. 

The following day, the pink sheet is gone over, the items 
which are undelivered balanced, if possible, and delivered; 
any quantity so delivered will be entered on the right side 
of the requisition, and the balance still unfilled will be trans- 
ferred to another pink sheet for the third day. This will 
be carried on from sheet to sheet, from day to day, until the 

103 



I04 UNIFIED ACCOUNTING FOR INDUSTRIALS 

total assembly requisition has been completed. In this way, 
the stores keeper is made responsible for looking after the 
complete filling of the requisition after it has once been 
given to him in its entirety. 

The reason for this procedure is that all requisitions 
must be turned in to the record clerk each day, so that the 
stores account may be kept up to date, and the distributions 
made to production orders and departments, and not held 
up until the full amounts of various parts have been de- 
livered. 

Production Order Distribution of Material 

The production order distribution of material (Form 
16) is a new form which has been provided to take care of 
the distribution of material to both production orders and 
departments, and also to give a daily check on the additional 
amount of material allowable to be drawn on any production 
order. 

The clerk who has charge of the record should work 
alongside the clerk in charge of the general and component 
stores records in the handling and posting of requisitions 
coming into the stores keeper's office. These two clerks 
should handle them jointly, as described hereafter. A pro- 
duction order distribution of material sheet, or sheets, 
should be opened for each production order number, and 
should then be filed in a binder in the order of issue. The 
stores clerk is provided with a complete set of pieces, parts, 
and unit key cards, which show in detail the kinds and 
quantity of material required to make any one piece, part, 
or unit. 

As soon as the stores keeper receives his copy of a pro- 
duction order from the planning department, the production 
record clerk immediately opens up a sheet for this produc- 
tion order number, showing the quantity required, piece 



STORES— SPECIAL FEATURES 



105 



number, and order number. He then turns to his key cards 
and ascertains the amount of material required per piece, 
and opens up a column on this distribution sheet for each 
kind or size of material required to manufacture the item 
called for, inserting the name of the material, the total 
requirements for the production order, etc., and he is then 
ready to receive requisitions against the production order. 
No material whatever should be delivered until the stores 
keeper's copy of the production order has been received, 
and this production order material distribution sheet has 
been opened. 

This production order distribution sheet will also answer 
for the distribution of material to departments, thus saving 
the entire time previously taken in the posting of requisitions 
to departments separate from the production order. This 
combination of posting to production orders and depart- 
ments will be accomplished in the following manner: 

When the first requisition for material chargeable to a 
production order comes in and is posted on this production 
order material sheet, the department which draws the ma- 
terial should be entered just above the words "General" or 
"Semi-Finished Stores" (which is the same as "Component 
Stores"), the classification of material showing just below. 
As each kind of m.aterial on any production order will al- 
ways be drawn by the same department, the monthly total 
of the material drawn, in any one column, may be recapitu- 
lated from that column to the "Recapitulation of Material 
to Department." Thus the posting to production orders 
.will be all that is necessary to get a departmental distribu- 
tion as well as the classification of material used by each 
department. 

Moreover, it will not be necessary to figure the extension 
of the individual requisitions going through, which will save 
a great deal of time. This will be properly taken care of by 



I 



I06 UNIFIED ACCOUNTING FOR INDUSTRIALS 

the footing of these pages at the end of the month, when 
closing the production order for posting to the production 
and betterment order record ; that is, the unit price will be 
shown for each requisition drawn, but the extension is made 
on the monthly totr.l drawn instead of on each individual 
requisition. 

These last two features, the combining of the depart- 
mental and classification of material posting on the same 
sheet with the production order distribution, and the extend- 
ing of the requisitions only by the monthly total drawn, will 
prove a great saving of time in the handling of this record. 
Of course, if the unit price shows any change, it may require 
two or more different extensions for the month, but, as a 
usual thing, the unit price will be the same during any one 
month. 



Assembly Production Order Material Distribution 

The "Assembly Production Order Material Distribu- 
tion" form has been provided to take care of the distribution 
of material on assembly production orders in a way similar 
to that in which the production order distribution takes care 
of the distribution of material on production orders for 
pieces and parts. (See Form 17.) 

At the time a production order is issued by the schedule 
clerk and a lot is started, this sheet will be typewritten from 
the unit key cards by the order department, it being a copy 
of the assembly requisition. This sheet shows the produc- 
tion order number and the department number drawing the 
material, the quantity required, part or unit number, and 
part or unit name. At the time this sheet is made out, the 
first two columns only are filled in, showing the number of 
pieces required of each piece or part, and the piece or part 
number; it thus constitutes c. bill of material for the lot 
specified on the production order. As soon as this is made 



STORES-SPECIAL FEATURES 



107 



out, the original copy, being a requisition, is forwarded to 
the foreman of the department who turns it over to the stores 
keeper as soon as he is ready to receive the material. The 
assembly sheet is turned over to the distribution clerk in 
the stores keeper's office, who inserts it in his binder of 
material distribution as an authorization to deliver the 
quantity of goods specified. As assembly requisitions and 
the "Short" list of the same are turned in daily by the 
stores keeper, the items delivered on them are posted into 
the four "Delivered" columns on this sheet, each time show- 
ing "Date," "Quantity Delivered," and "Unit Price" ; this 
entry being made at the same time that the stores record 
clerk makes the credit entry on the stores record, giving the 
distribution clerk the unit price. 

The extensions are not made on these individual de- 
liveries, as this is unnecessary, the assembly production 
order material distribution sheet being the first and final 
distribution of this material, both to department and pro- 
duction order. The unit price is provided in each column 
to cover cases where it may have been changed during the 
life of the production order. 

When the total pieces on any part are delivered, the total 
quantity will be extended in the "Total Quantity" column, 
and the extension made and entered in the "Total Amount" 
column, and the material classification entered in the last 
column. As soon as the production order is completed, this 
form will be closed out and filed in the finished order binder, 
after having been extended, and the totals inserted on the 
copy of the production order, which is turned in to the dis- 
tribution department. 



Extensions 

All extensions on the material issued on production 
orders should be made by means of a mechanical calculator 



$ 



lo8 UNIFIED ACCOUNTING FOR INDUSTRIALS 

at the time the production order is completed, thus saving 
the time of the clerk, who posts only the quantities, and 
greatly expediting the worh of closing up production 'ders, 
as well as saving a large amount of time in har ''.ing the 
distribution of the requisitions through not extending each 
individual requisition. 

Daily Report of Stores Balance 

The stores record clerk should draw off, at the close 
of each day, a recapitulation of the balances on hand of all 
manufacturing materials in general stores, and of all semi- 
finished and finished stores. This balance sheet must be 
made out in triplicate, one copy being sent to the works 
manager, one copy to the purchasing agent, and one copy 
to the planning and production department. Eventually, 
when these daily balance sheets become thoroughly regu- 
lated, the use of the stores clerk's order described below may 
be done away with ; for this balance sheet in the hands of 
the planning department, together with the repor': of finished 
parts received in stores, from tracing tags, will provide 
full information as to starting operations for the manufac- 
ture of the parts nearing minimum, so that the reaching 
minimum will be readily anticipated, and the customary 
procedure of crying "Short*' wiU become a thing of the 
past. 

Objects of Stores-Keeping 

^ From the foregoing it can easily be seen that four great 
objects in keeping stores are : 

1. To maintain a perpetual inventory. 

2. To prevent the use of material without its being ac- 

counted for, or without authorization. 

3. To prevent unnecessary investment in material, by a 



STORES-SPEQAL FEATURES iqq 

proper specifying of maximum and minimum 
amounts. 
4. The manufacture of materials on a balance schedule 
basis in an economical manner, by the working 
together of the order and stores departments. 

Stores Keeper's and Stores Clerk's Orders 

As the stores keeper has full control of maximum and 
minimum amounts in stores, the responsibility is his, of 
course, for maintaining these amounts. In case of general 
stores, where the stock is bought, he should make out a 
regular requisition for purchase; but in the case of com- 
ponent stores or finished stores, where any maximum or 
minimum amounts have been established, he should use a 
stores clerk's order, as a requisition to have such parts 
made up ; and as the maximum amount for any item is an 
authority for the manufacturing of such items when it is 
brought down to minimum, the stores clerk's order to manu- 
facture will be turned over to the order clerk for his guid- 
ance in starting the work on the parts required. 

This order (Form 18) is made out in duplicate by the 
stores clerk ; one copy remains with him, and the other goes 
to the schedule clerk in the production department. As soon 
as this is received, it will be handled by him in exactly the 
Same way as any other production order, by the issuing 
of the necessary production order for the manufacture of 
the item in accordance with the production order method 
in use. 

The rule governing the issuance of these orders by the 
stores clerk is that he should never issue an order (except 
in special instances) until the stock is reduced to the min- 
imum, and the "Amount on Hand" must always be shown 
opposite the space provided for in the stores clerk's order. 
One order may cover several different items, but each item 



ii 



no UNIFIED ACCOUNTING FOR INDUSTRIALS 

must be covered by a separate production order on the part 
of the production department. 

Goods Returned Memorandum 

Goods that have been sent out of a factory and returned, 
cannot be taken back into stock until some special considera- 
tion has been given them. Therefore, for this purpose, a 
"Goods Returned to Us Memorandum" (Form 19) has been 
designed on which may be entered the receipt of all goods 
of any nature whatsoever that are returned, whether they 
are returned for repairs, non-acceptance, or for any other 
reason. 

This form is made out in triplicate; the white copy is 
kept by the receiving clerk; the second copy (pink) is 
immediately sent to the stores department; and the third 
copy (blue) is sent to the sales department. As all goods 
returned are usually a question of sales, the sales depart- 
ment must first decide what is to be done with the returned 
goods. It will then write upon this form such instruc- 
tions as its correspondence indicates is necessary, whether 
the returned goods are for repairs or for acceptance back 
into stock. If for repairs, the sales department immediately 
fills out one of the copies and forwards it to the order depart- 
ment to make the repairs, entering the repair order into 
sales the same as any other order. If the goods are to be 
taken back into stock, the copy will be so marked, and one 
copy of the receipt is returned to the stores keeper, who will 
act according to the instructions received thereon. 

All information called for on this form must be filled 
out by the sales department and shipping department, and 
where a credit is to be given it must be so stated. As soon 
as all this information has been obtained, the third copy 
(blue), held by the sales department, must be signed by the 
manager and sent to the accounting department. 



STORES— SPECIAL FEATURES 



III 



If repairs are to be made, the copy to the shop super- 
intendent means that a production order must be made out 
to cover the repairs; and whether it is for a customer or 
to go into stock must be clearly indicated. 

In other words, the whole question of returned goods 
is, first, if they are returned for repairs to be made on them 
for the benefit of the customer, they must be handled by the 
sales department, as this is either a question of sales or a 
question of making good some previous sale. On the other 
hand, if they are returned because they are rejected, it is a 
question of sales cancellation to be followed by instructions 
for disposition. In either case, one of two things must 
take place : either they must be repaired to be put into per- 
fect salable condition again through a production order 
for repairs for this particular item, or else they must go 
into stock as finished stores, the original instructions for 
which must emanate from the sales department. 

Accounting for Goods Returned 

Returned goods, in this instance, means something which 
the company has manufactured and has previously sent out, 
and which has been returned for some one of many different 
causes. 

The goods may be returned because they are unsatis- 
factory to the customer, perhaps as to quahty, perhaps as 
to time of delivery, or for other reasons. The nature of the 
return from the customer will affect the accounting. If 
the goods are not in shape to go back into stock, certain 
repairs must be made so as to put them into shape in order 
to get them back in stock. Now, it is obvious that such 
repairs cannot be charged as an additional cost to the goods ; 
it is usually an expense due to bad sales, or bad selling 
policy, and in such case should be charged up as a sales 
expense, inasmuch as the goods, after being put into perfect 






I' 



I i 



H2 UNIFIED ACCOUNTING FOR INDUSTRIALS 



repair, must go into finished stores at the same price as 
other items of the same nature. Any losses due to the dis- 
satisfied customer will then, nine times out of ten, be a 
direct charge to the selling department, and not to the 
factory or to goods made by the factory, unless they are 
defective by manufacture. 

This same rule also applies in cases where the sales de- 
partment issues orders to have manufactured certain types 
of product, as for instance, engines, and for certain sales or 
credit reasons these orders are cancelled or returned, and 
these special types of engines have to be made over into 
other types. The expense of rebuilding these engines can- 
not be considered as an additional cost to the goods, being 
due to bad sales or credit policies, and must be charged up 
as a commercial expense. 

Again, goods are returned to be repaired for a customer, 
which, in a motorcycle department, is quite a general thing, 
and, as the number of machines put out grows, this work 
also grows rapidly in proportion. In such cases, an order 
must be made out to have each particular article repaired, 
followed by a production order for use in the factory, so that 
all labor and material for making the repairs will be charged 
up to the original item, in addition to which must be charged 
the prorated amount of general overhead. 

Other complications that come into this accounting are 
in the nature of such repairs as cannot be done in the factory 
itself, but must be sent out for the customer. In such cases 
the article may be sent back to the factory, or shipped direct 
by the customer to the place where it is to be repaired, for 
all of which, special provisions must be made, but not 
primarily as is often done in the cost department. 



CHAPTER VII 

PREPARATION FOR THE HANDLING OF 

PRODUCTION 

Illustrating and describing in detail the neces- 
sary classification of pieces, parts, and units, 
and their relation to stores, schedules, etc. 



1 



m 



¥4 



I 



CHAPTER VII 



PREPARATION FOR THE HANDLING OF 

PRODUCTION 

General Considerations 

In the next few chapters the preparation necessary for 
handling production on a more or less scientific basis will 
be described in considerable detail. In no other way could 
the relation between works management and correct ac- 
counting methods and its dependency on them be shown so 
well. It also shows how low costs of production may be 
obtained and maintained. 

To express the whole matter briefly, the real purpose of 
any manufacturing concern should be to get out of invest- 
ment, labor, and material all that can be obtained therefrom 
in the shape of product. The few chapters devoted to the 
handling of product are brought in to show its close relation- 
ship to accountancy and the dependency of the one on the 
other for economical results. If it were not for this con- 
sideration, questions of shop practice would not enter into 
a work of this character at all. 

Analysis of Production Handling 

The work of production handling naturally resolves it- 
self into the following divisions and order of arrangement : 

1. A standardization of the pieces, parts, units, and 
models to be manufactured, their relation one to 
another, and the materials required for each. 

lis 



"i 



1' 1 



If 
■I 



I 



Il6 UNIFIED ACCOUNTING FOR INDUSTRIALS 

2. A Standardization of the operations and rotation of 

operation on all pieces, parts, units, models, etc. 

3. The standardizing and indexing of all dies, jigs, 

fixtures, gages, etc., required for same. 

4. A balancing and grouping of the machine tool equip- 

ment so as to show the pieces and operations pos- 
sible on each machine or group of machines. 

5. The tabulating of pieces and operations that it is 

possible to do on each different type of machine 
tool. 

6. The making of time studies on all of the operations 

of each piece, and the allotting to same of a stan- 
dard time for doing the work on each operation ; 
this time to be the basis for premium or piece- 
work rates and for possible plant output. 

7. The scheduling of sales requirements for the season's 

output, and from this, scheduling the manufactur- 
ing requirements on a parts balance basis so as to 
maintain a full complement of parts and pieces 
required for assembling. 
8. The developing and installing of a method for putting 
production through a factory on a parts balance 
schedule basis so that at all times the entire plant 
capacity will be under full control. 

Utilizing Plant Capacity 

One of the most important features in efficiency work is 
the ascertaining, developing, and utilizing of plant capacity 
to its utmost. To do this there must first be a complete 
tabulation of all pieces, parts, and units that are to be manu- 
factured (with material required), and then the require- 
ments of production handling, as outlined above, can be 
carried out in detail. 

Having established a standard design for the pieces, 



PREPARATION FOR HANDLING PRODUCTION 117 

parts, and units to be made, and having made an analysis of 
the machine tools available, all of the operations on each of 
these pieces must be standardized to determine with what 
tools and on what machines each piece of work can be done 
to the best advantage. Everything is then ready for making 
time studies on these operations and preparing for the 
schedule of production. When this schedule has been laid 
out and the whole proposition developed and standardized, 
then, and not until then, may the planning of production be 
installed on an economical basis and as it should be carried 
out ; thereby utilizing the entire plant capacity and meeting 
the predetermined manufacturing requirements as per 
schedules of output. 

One of the great problems before manufacturers today 
is to discover the weak places — the points at which their 
plants lack capacity to manufacture the volume of product 
required on a balanced basis. It must be understood that 
full plant capacity cannot be reached until its equipment is 
developed to the point where time studies may be made for 
obtaining data on ultimate capacities. Undoubtedly, there 
can be an approximate estimate of what the capacity will be, 
based on the manufacturer's machine tool rates of output, 
but in most lines of work such estimates have been found, 
in the ultimate analysis of time studies, so erroneous as to 
necessitate a complete change in the whole organization of 
the plant. 

It would seem that no more profitable work could be 
done in any plant than to establish for a while a pace-making 
department for all pieces and parts to be manufactured. 
This should be done in order to obtain machine capacity, 
man capacity, plant capacity, and time limits, with a rate- 
setting based upon these. It also enables the determination 
of the necessary operations with rotations of same. 

The compiling of data from which this information may 



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Il8 UNIFIED ACCOUNTING ' FOR INDUSTRIALS 

be obtained is most valuable work, as it shows not only the 
points which need building up in equipment, but also, if ad- 
ditional equipment is not put in, what finished or partly 
finished parts must be bought outside, in order to let the 
departments of greater capacity work up to their maximum. 
The condition of any plant in which this work is under- 
taken is usually such as to require considerable time for the 
compiling and analyzing of the complete data of its capacity, 
but when once this is done, the manufacturer will have a 
control of production which very few executives enjoy 
today. Although the executive control which this standard- 
ization work gives is very desirable and necessary, the prime 
reason for such standardization i: to obtain a radical reduc- 
tion in the cos: 3 of manufacture, due first to the greatly in- 
creased efficiency of the plant from a machine point of view, 
and second, to the very material increase of output which 
can be obtained from the plant with less expenditure for 
labor. 

Production and the Sales Department 

In order to manufacture economically it is necessary to 
put the entire production of a factory on a schedule basis, 
by first determining what the sales requirements will be for 
a manufacturing year or season. It is also vi' illy essential 
for economical manufacture that these schedules be made to 
protect manufacturing conditions. 

It is a common practice with many manufacturers today 
to run the manufacturing end of their business to suit the 
sales end ; so much so that when special features ar : desired 
by the sales department, the factory immediately proceeds 
to furnish them. What is needed above all else is to develop 
and introduce ''parts common to all" practice, and, having 
furnished the selling end with standard articles which the 
trade requires, it is up to the 3ales force to sell these articles 



PREPARATION FOR HANDLING PRODUCTION 



119 



and not make the factory its tool in catering to the whims 
of individual customers. 

In most scrap piles today there are many thousands of 
dollars' worth of pieces and parts which have been scrapped 
because they were made up as special features to suit indi- 
vidual customers with apparent disregard of the amount to 
be ultimately used. As a result, when the particular cus- 
tomer's orders came to a stop, there was on hand a large 
number of these special parts which the selling department 
was unable to sell and which could therefore only be 
scrapped. 

In other instances, large amounts of scrap have been 
produced by adopting new designs for certain pieces and 
parts with absolute disregard of the quantity of old pieces 
and parts on hand at the time of their adoption. Obviously, 
this should be avoided. 

Schedule of Production 

While, of course, manufacturing schedules must be made 
out in accordance with the sales requirements as a whole 
and the ability of the sales department to dispose of the 
product, these matters must be gone over in advance and the 
production schedule made up in accordance and with regard 
to factory capacity. Then, with this schedule at the maxi- 
mum, all new features should be reserved for the following 
season's models and special features eliminated to the great- 
est extent possible. 

It is obvious that before scheduling of production can 
be carried out with any efficiency, it is necessary to know 
exactly what there is with which to turn out production, and 
to have proper methods laid out for performing the opera- 
tions required. It has been found in many cases, by actual 
observation, that one operation is often done in half a dozen 
different ways, each one more or less extravagant in the 



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120 UNIFIED ACCOUNTING FOR INDUSTRIALS 

method of handling the material and labor involved. It is, 
therefore, essential that there should be established standard 
methods for the manufacture of each article, and instruc- 
tions be on record as to how and in what rotation the vari- 
ous operations should be performed. The accuracy of the 
work depends largely upon its being done in the proper rota- 
tion. Theoretically this should not be so, but in practice 
a considerable amount of scrap is accumulated in many 
plants because of operations being put through in wrong 
succession. 

To meet this condition, the first consideration is the 
tabulating of articles to be made, for which there have been 
provided "Piece Key Cards,'' 'Tart Key Cards," and "Unit 
Key Cards" (Forms 20-22). Too much care cannot be 
given to this all-important starting work, for upon the cor- 
rectness of the information on the piece, part, and unit 
key cards depends the efficiency of the work of the purchas- 
ing department, the stores keeper, the production depart- 
ment, and the cost accounting department. The division of 
any unit into pieces or parts by operations should be done in 
the drafting »oom and shown on the drawings and bills of 
material going therefrom, and each piece or part of any 
unit to be manufactured must be given a number to dis- 
tinguish it from all of the other parts and pieces. 

System of Numbering 

There are a number of short-cut methods of joining and 
classifying the numbers of units, pieces, and parts, keying 
all pieces and parts into their respective units. In most 
factories, however, pieces and parts are already numbered, 
and where drawings of these pieces and parts are correlated 
it would not ahvays be practicable to change the numbers, 
especially where repair parts have been catalogued by 
number. 



PREPARATION FOR HANDLING PRODUCTION 121 

In the numbering of articles manufactured, an efYort 
should be made to give group numbers ; for instance, pieces, 
from 1 to 3000 ; parts, from 3000 to 5000 ; units, from 5000 
up. Sufficient provision should be made for the various 
sizes of standard screws, bolts, nuts, etc., and, so far as pos- 
sible, all special features should also be numbered in a group 
and filed separately from standard items so that a check 
can be kept on them, and so that they can be gone over 
frequently by the management. Any additions to these 
special features should be reported to the management from 
time to time. This is because of the danger of extending 
special features into too great a variety, and also because of 
the tendency on the part of the designing department and 
factory management to develop new features and apply them 
while the company has a large stock of designs on hand 
which should not be changed until the stock is exhausted. 
Each special feature, of course, will be a unit in itself and 
will be registered on a unit key card (Form 22), showing 
all the parts and pieces of which this particular unit is 
composed. 

Provision should also be made for numbering the draw- 
ings and rough material for any finished part, so as to key 
on to the finished part. For example, on a gasoline engine 
the connecting rod may be No. 20, and is made from a drop 
forging. As the connecting rod finished is a component 
part, it goes into component stores as No. 20. The forg- 
ing for this also requires a specification, and this forging 
and its drawing number should be No. 20-A, the "A" sig- 
nifying the rough material for the finished part. However, 
should this connecting rod at any time be bought outside 
in a finished condition, it would come into general stores 
as No. 20, instead of No. 20-A which is its distinctive num- 
ber when received as a rough forging. 

As described in Chapter V, a unit is an assembly of 



I 



122 UNIFIED ACCOUNTING FOR INDUSTRIALS 

two or more pieces or parts into a thing which has a func- 
tioning power in itself or is in a condition for sale by itself 
as a complete article. Thus, a motor is a unit because it 
will deliver power. A transmission gear is a unit because 
it is a sales item. Units vary greatly in their characteristics 
according to the nature of the business and its sales require- 
ments ; that is, what would be a unit in one business might 
be only a part in another. 

A part consists of an assembly of two or more pieces, 
being in itself, as distinguished from a unit, devoid of any 
functioning power or sales possibilities (except as repairs), 
until connected or associated with some other parts and 
pieces. 

A piece is distinguished from a unit and a part as being 
inactive and inoperative ; at the same time it is individual in 
its character. 

Thus, an automobile engine would be a unit; the fan, 
water pump, etc., would be parts; while the fan blades, 
screws, bolts, crank shaft, cam shaft, etc., etc., would be 
pieces. 

A part should be such an assembly of pieces as can and 
will be made up and put into component stores ready to 
be drawn out and assembled into a complete engine with 
other parts and pieces. It should be noted that it is possible 
for large and primary units to be composed of several 
smaller or secondary units as well as parts and pieces. Thus, 
a tractor, which would be a unit, would include a secondary 
unit, the engine, besides the various parts, such as frames, 
wheels, etc., and the separate pieces, such as screws, nuts, 
bolts, etc. 

Piece Key Card 

This card is written up for each piece, and, as will be 
noted in Form 20, shows the piece name and number, draw- 



PREPARATION FOR HANDLING PRODUCTION 



123 



ing number, pattern number, the size of the lot to be put 
through, dimensions of the stock from which it is to be cut, 
kind of material used, and amount of material required for 
one piece or one hundred, the average weight, rough or 
finished, the average weight of scrap produced, and the 
pieces for which waste cuts can be used. It also gives the 
name and letter of the operation or operations, the machine 
and department in which the work is to be done, and a list 
of the parts and units using this piece. 

If a piece is to be used only for an assembly into parts, 
the number of pieces required for each part and the part 
number will be shown in the column "Used on Sub-Assem- 
bly"; and the total number used on each unit is extended 
in the column, "Used on Units." For example, four of 
piece 1000 may be required on part 3500, and then in turn, 
four of part 3500 are required on unit 5000. Therefore, 
the card will read: "4 used on part 3500"; "16 used on 
unit 5000." If, however, these pieces are used exclusively 
in the final assembly of a unit, without previously having 
been assembled into a part, they will be entered in the 
column, "Used on Final Assembly," thus meaning that they 
are attached to certain pieces on the final assembly. That is, 
piece 1550 may be used only for the final assembly ; one will 
be attached to piece 1600, two to piece 1601, and three to 
1602, all entered in this column; and then, in the column 
"Total Used on Units" will be entered, "6 used on unit 
5001." 

It is possible that a piece may be attached to different 
pieces on different units, in which case the pieces to which 
it is attached will be bracketed, showing the unit to which 
they apply. It may also occur that a certain piece may be 
used on an assembly into a part and required also for use 
on the final assembly of these parts into a unit. This should 
then be entered on the card as follows : 



5* 



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124 UNIFIED ACCOUNTING FOR INDUSTRIALS 

"4 used on part 3000 (four parts used on the unit) ; 
2 assembled to piece 50; 3 assembled to piece 65" 
(making a total of 21, used on unit 5002). 

The complete file of piece key cards must also contain 
for each particular complete unit manufactured a separate 
card for each piece bought, and these cards should be 
stamped "Bought" with a rubber stamp, so that the stores- 
keeper can immediately know that such a piece is bought 
in the open market and not made in the factory. In case 
certain pieces which are usually manufactured are occasion- 
ally bought, the cards for these will not be marked in this 
way, but they will be shown in the Stores account as "Pieces 
Ready for Assembling" and not as "Raw Material" with 
the letter "A" following. 

These cards are, as the name implies, used to furnish a 
key to the materials and operations required to produce 
some piece or part of any given unit, together with informa- 
tion as to the different units on which the piece or part 
may be used, and the different parts on which the pieces are 
required. 

Part Key Card 

This card (Form 21) furnishes a complete list of the 
pieces which may be drawn from stores and assembled into 
parts which in their turn may be used for the final assembly 
of a unit. It gives the part name and number, as well as 
drawing number, and size of lot best handled through all 
operations, and it shows the various unit numbers on which 
this part will be used, and the number of parts required on 
each of these units. It also contains the number and name 
of each of the operations of assembling. The operation 
should be designated by a letter instead of a figure, as opera- 
tions carry letters, and rotations on the operation, numbers ; 



PREPARATION FOR HANDLING PRODUCTION 



125 



I 



and as the operation letter serves also as a key on the work- 
man's production ticket, the use of a figure would be 
confusing. The card should show the department in which 
each operation is done, and the piece numbers and the num- 
ber of pieces required. 

After the pieces going into the part have been ascer- 
tained, they should be entered on the part key card on the 
blank line following the name of the operation, as opera- 
tion "A," that is, the first line should show the operation 
number and name, and on the right half of the card should 
be entered, on the same and following lines if necessary, the 
pieces required in the work of this operation. Operation 
"B" should then be entered on the left side of the card, on 
the line following the entry of the last piece required for 
operation "A." Then will come, on the right-hand side of 
the card, any additional pieces required by the workman to 
complete operation "B," "C," "D," etc., thus giving a his- 
tory of all operations (which are taken from operation study 
card, described in Chapter VIII). 

Unit Key Card 

The unit key card (Form 22) has been provided to give 
a complete list of the pieces and parts required for the 
assembly of each unit. The unit number and name are 
given, as well as the drawing number of the unit, the num- 
ber of cards comprising the list for this unit, and the number 
of each card of the group. The operation number and 
name, and the pieces and parts required, as well as the de- 
partment in which each operation is performed, are entered 
on the card, the same as on the part key cards, thus showing 
a complete list of all parts and all separate pieces which 
are required for the final assembly of the unit. The parts 
should be grouped on the card and should be specified as 
parts, and the pieces as pieces. 



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126 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Preparation and Care of Cards 

The piece, part, and unit key cards should be made out 
by the chief draftsman, and one of his assistants should be 
delegated to keep all sets of key cards up to date, making, 
under the chief draftsman's instructions, any changes that 
may become necessary. One set of these cards should be 
held in the drafting room by the chief draftsman, filed in 
rotation by the piece, part, or unit number. Two additional 
sets should be made; one for the stores clerk and one for 
the purchasing agent. Each of these sets should be written 
in different colored ink, so that one set may be readily dis- 
tinguished from another, and any transposition from one file 
to another detected. The chief draftsman should approve 
both the master set and the other sets as made out. None 
of the entries on these cards should ever Le changed, or 
substitutions made, except by the chief draftsman or his 
clerk. 

These additional sets of cards should be filed in rotation, 
according to number, the same as the chief draftsman's set, 
but in case at any future time a numbering system of pieces 
and parts is introduced which will key these pieces into 
parts and units by the numbers given them, then these addi- 
tional sets of cards and an additional set for the chief drafts- 
man also, should be filed with the part and unit cards as 
guides to the piece cards. That is, a unit card will be placed 
in the file, and behind that, the first part card which will be 
required ; behind this part card will be all the pieces going 
to make up this part; behind these will be the next part 
card with all the pieces going to make up this part, and so 
on. Behind the last of the part cards will be filed the in- 
dividual pieces used on assembly for this unit. In this 
same manner all the other unit key cards, together with their 
various part and piece key cards, will be put into the 
file. 



PREPARATION FOR HANDLING PRODUCTION 127 

Uses to Which Key Cards Are Applied 

From key cards the following data are obtained in the 
handling of production : 

1. A list of pieces and parts to be manufactured, for 

the information of the production department in 
making its study of machine capacity, operations, 
and time. 

2. Information for the purchasing department in mak- 

ing up a purchase schedule for the year, showing 
quantities and date of delivery at intervals during 
the year to anticipate the requirements of the 
manufacturing schedule. 

3. Information for the purchasing agent as to what 

pattern is required to be sent to the foundry for 
casting any specified piece or part. 

4. Information to enable the stores keeper to make up 

his purchase requisitions for material, as regards 
kind, quantity, and quality, and to order in such 
lengths and widths as will most economically cut 
to the size required. 

5. Information for the schedule department as to the 

number and name of operations required to pro- 
cess each specified piece, or to assemble each part 
and unit ; the department in which the w^ork is to 
be done; and the character of the machine on 
which the work is to be performed, so that it can 
fill in the tracing tag which goes to the plant with 
the production order for the first operation. 

6. Information for the schedule department as to the 

amount and kind of material required, so that the 
requisition for material can be made out and sent 
to the department with the tracing tag and pro- 
duction order for the first operation. 



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128 UNIFIED ACCOUNTING FOR INDUSTRIALS 
Drawing and Tracing Card 

Before a bill of material can be made up and a system 
for handling work through the factory established, it is 
necessary to have a proper method of classifying the hand- 
ling of drawings, blue-prints, and also patterns ; otherwise 
the piece and part key cards cannot contain the full informa- 
tion called for. This need is met by a ''Drawing and Trac- 
ing Card" (Form 23), which is used in the drafting room, 
not only as an index to all drawings, but also as a record 
of all costs of making the drawings, whether in pencil or 
ink, as a sketch, or for final tracing. The cost of making 
drawings should be obtained in the same way as the cost 
of anything else, that is, by the use of the workman's time 
ticket and requisition for material. 

The chief draftsman should have a set of distribution 
ledger sheets, as described in Chapter XII, and should give 
an order number to each drawing or set of drawings made. 
He should enter this number on the distribution ledger and 
charge against it all of the labor and material used to com- 
plete the drawing, the total of which should be placed on 
the drawing and tracing card. In addition to this, the card 
will show the disposition of the drawing after it is com- 
pleted, that is, under what file or number in the cabinet it 
is kept, or what use may be made of it otherwise. On the 
back of the card will be entered from year to year, the value 
of the drawing, this constituting a perpetual inventory of 
the same. As soon as any drawing becomes obsolete or is 
cancelled, the card must have "Cancelled" written across 
its face, together with the date of cancellation, but the card 
must not, under any circumstances, be removed from the 
file. 

The drawing and tracing card can also be used for 
recording negatives from which photographs are made, in 
exactly the same way as it is used for recording drawings, 



PREPARATION FOR HANDLING PRODUCTION 



129 



but these records of negatives should be kept in a file by 
themselves. 

In making up a file for the drawing and tracing cards, 
it is only necessary to file them serially ; that is, to give each 
card a number, and file it according to that number. If 
the number is known, it is easy to locate the drawing by this 
number. In case it is different from the piece or part 
number, the drawing number can easily be found on the 
piece or part key card, so that there is no necessity for 
filing the drawing and tracing cards both numerically and 
alphabetically as is often done. 

It can be readily seen that the drawing and tracing 
cards can be easily located under such a file, whether they 
pertain to drawings of an individual piece or part, or to 
drawings of an assembly of parts, as each unit card also 
contains the drawing number calling for the assembly 
thereof. 

Pattern Record Card 

The pattern record card (Form 24) is used for making 
a complete record of individual patterns, showing the cost 
of making them, and the account to which they were charged 
after being made. 

As a general thing, patterns are an asset to a company, 
except where they are made for some particular customer 
and charged to him, or where they become a part of the 
work in a contract covered by some sales order number. 
Also, in ordering castings, making changes in designs, etc., 
it is necessary to have a record of the patterns used and 
available. Therefore, it is very necessary that correct 
records of patterns be made. 

If a new pattern, or a pattern covering a change in de- 
sign, is made in the factory, it will be made over a better- 
ment order number, the same as any other betterment item ; 



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130 UNIFIED ACCOUNTING FOR INDUSTRIALS 

while, of course, if it is made by an outside pattern maker, 
it goes into general stores and is issued and charged out as 
a plant betterment. 

Great care must be taken in making pattern charges, as 
sometimes the pattern must be charged to some production 
order which is a combination of several production orders ; 
or again, to a repair order to cover some repair or replace- 
ment, instead of a betterment order for a new pattern. If, 
however, it is a pattern which is to be used regularly, the 
record must always show the capital account number to 
which it is charged, this information being furnished by the 
accounting department. Further, the pattern record card 
must always show the loft number, aisle number in loft, and 
shelf number in aisle on which the pattern is regularly kept 
in storage, so that, when taken out and sent to the foundry, 
it will always be put in its proper place on its return. 

In commencing a pattern record it is, of course, impos- 
sible to obtain all the "Pattern Data and Costs" in items as 
called for on the cards, the total cost only being given as 
taken from the inventory ; but, in every instance, the draw- 
ing number, flask number, flask size, and follow board 
should be given, so that information concerning all these 
items will always be immediately available. 

Great care should be used in writing up the pattern 
record at the start, if not taken from inventory, to see that 
all patterns owned by a company in its own plant or in 
other foundries are included on these cards. 

In filing the pattern record cards, there must be, of 
course, a set filed numerically, according to the number of 

the pattern. 

Separate cards should be made out for the patterns of 
special tools and jigs, and these are also filed by the key 
number, which identifies the pattern with the piece or part 
for which it is to be used; the patterns being numbered 



PREPARATION FOR HANDLING PRODUCTION 131 

1, 2, 3, etc., when used on the same jig. As the jigs are 
numbered according to the part number requiring same, 
with a letter added—" A," "B," "C," etc.— the second 
pattern number for the second tool for part No. 1500 will 
be No. 1500-B2. 

Pattern Location Card 

In order to keep a record of the location of patterns 
when they have been taken out of the regular place of stor- 
age, it is necessary to provide "Pattern Location Cards" 
(Form 25), on which will be placed the number of the pat- 
tern, date on which it was sent out, and the concern to which 
it was sent. This card must be placed immediately back of 
the regular pattern record card. It can be used for a long 
period of time, inasmuch as it is a running record. For 
instance, the pattern may be sent on a certain date to a cer- 
tain factory, and the date and name of factory are entered 
on the card. When the pattern comes back, the date is put 
on the card, and "Pattern Loft" is marked under "Loca- 
tion," which means that the pattern is in its regular place 
of storage. When it is sent out again, the information neces- 
sary to locate it is placed on the same card, and so on until 
the last line of the card is used up, so that at a glance it may 
always be known where the particular pattern is located. 



CHAPTER VIII 

ANALYZING AND GROUPING MACHINE 
TOOL EQUIPMENT 



A description of the methods employed in 

measuring up plant capacity and in obtaining 

a balance on equipment and men. 



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CHAPTER VIII 

ANALYZING AND GROUPING MACHINE 
TOOL EQUIPMENT 



Machine Study Card 

In making a study and analysis of the machinery and 
tools available for manufacturing a complete product, the 
first step is to make up a list of all the machines in the plant, 
group or chart them by size, capacities, and possibilities, 
and, after this is done, make an analysis of the pieces and 
parts and operations possible on these groups of machines. 
For this purpose the "Machine Study Card" (Form 26), 
has been provided. 

On this card is to be entered an analysis of all the 
machines available for manufacturing purposes. In the 
first place, it will be necessary to number and classify all the 
machines in the factory. They should be numbered from 1 
up, thus avoiding duplication of numbers, but they should 
also have as a prefix to this number, the initial or initials 
of the particular kind of machine, for instance, "D. P." for 
drill press, "P. P." for punch press, "S. M." for screw 
machine, etc. 

The machines having been numbered and lettered in this 
manner, should be grouped as to kinds, capacities, sizes, 
equipments, etc. ; machines of the same classification which 
are capable of the same kind of work being put in a group, 
so that drill presses of one size and kind will be in one group, 
and those of other sizes or kinds will be in other groups by 
themselves. Each group of machines should be lettered in 

135 



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136 UNIFIED ACCOUNTING FOR INDUSTRIALS 

addition to the initials of the machine which forms the basis 
of class.ficat,on ; thus, drill presses would be designated as 
.. f,r/' . °- P- - b." "D- P. - c." etc. When giving 

of the machme should also be given; but for handling pro- 
duction, the ,n.tial and group letter will be aU that is 
necessary. 

After this grouping has been done, all the machines of 
each group should be put on one machine study card, and 
a separate card made out for each individual machine not 
ma group. The machine study card will show the type 
and numbers of the machines in the group, the make. Z 
size, and serial numbers, as well as the horse power re- 
quired; also the location in the plant, by buildinj. section 
and department. The date and card number wS also be 
shown and later the original cost can be inserted if desired, 
so that in any consideration of the work which is done 
on any machine, reference can be made to its earning 
capacity as compared with the investment it represents 
Machine study cards should be numbered in rotation 

detrctL"'' '> ' *'' ''''"" °f ^"y ^^^^ ^^y be readily 
detected, as it is imperative that the set be complete when 

cTrd winV" '"''''? °' P'""' '^P=^"'y- ^' the top of the 
card will be given the number of the chart on which the 
machines are shown. 

on II '^'"" u- '' ^^''''^ *° ^^^^ ^^^ information appearing 

that thri^T ^'"'^ '"''' ^^'"'^^^^ '" ~""- form so 
that the plant capacity can be read at a glance instead 

of requiring the study of numerous statistical cards he 

machines m each department may be illustrated by a graphic 

chart showing their capacities, tools for same. etc. Thi 

however, is something which can be done later just as we i 

^in ? ""^ "°' "^ '°"^ '' ^'^ '^^ ""less it i 
needed at once. 



GROUPING MACHINE TOOL EQUIPMENT 137 

As additional machinery is installed in the plant from 
time to time, machine study cards should be made out for 
it, or, if these machines are additions to a group, the data 
should be inserted on the cards already made out. 

Tool and Fixture Key Cards 

A set of tool key cards are as necessary for the control 
of production as are key cards covering the products made: 
first, because it is necessary to know what yield a tool or a 
set of tools will give per grind and per life of the tool, so 
that replacements can be taken care of; second, so that the 
proper tools can be requisitioned from the tool cribs for 
each set-up and for every tool required for various opera- 
tions ; third and most important of all, so that a proper cut- 
ting edge or point may be maintained on all tools by having 
specifications for the amount of work each tool shall be 
allowed to do per grind. 

The condition of the cutting edge or point of tools has 
more to do with both quantity and quality of work than is 
usually realized, and both set-up men and machine adjusters 
should be most carefully instructed and disciplined in the 
maintenance of such tools in proper condition. If this is 
not done, quantity and especially quality of work will be 
greatly lowered, as what is wanted is to have the material 
cleanly cut, not "pushed'' out of place. For this reason it 
is a matter of great importance that all tools shall be 
properly cared for. 

Unless grinding specifications, together with the specifi- 
cations for depth, width, and length of cut, are carefully 
carried out, bad work and a failure to meet the schedule of 
manufacture will occur on account of the fewer pieces made 
and the greater rejection of those that are made, to say 
nothing of the destructive effect on the tools and fixtures 
themselves. 



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138 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Tool Key Card 

This card (Form 27) is designed to make a record of 
what a tool will do, and the condition under which it must 
be used, and it is highly important that all of its data be 
faithfully filled in. The tool is given a symbol, and, if made 
for any particular set-up, this must also be indicated. In 
addition to this, the number of the component for which the 
tool was designed is to be given, followed by a description 
of the operation, not an operation symbol. 

In many instances the average number of pieces that a 
tool will make from one grind, or as a total, will have to 
be estimated. Careful observation of the tool in actual use, 
however, will provide any corrections that may be necessary 
on the original estimate. Such corrections based on definite 
information should be made in order to standardize the 
exact work that the tool will do, and in making these 
corrections the speed, feed, and cut should also be given due 
consideration. 

Tool Set-Up Key Card 

In most factories, there are a certain number of opera- 
tions on automatic screw machines, hand screw machines, 
turret lathes, etc., that require a complement of several 
tools, and several different complements for different opera- 
tions. In order to register all this, the 'Tool Set-Up Key 
Card" (Form 28) is provided. 

The data filled in on this card will be obtained from the 
tool key card (Form 27), and from the fixture and die 
key card (Form 29), so that when it is necessary to set 
up a job the tool set-up key card can be depended upon to 
requisition from the tool crib or tool storage everything 
that is required for processing the given operation. 

Undoubtedly, the number of pieces per grind on differ- 
ent tools in a set-up will vary; therefore, the time periods 



GROUPING MACHINE TOOL EQUIPMENT 139 

that will be allowed for changing tools must be based upon 
the tool that has to be ground most frequently. 

On the tool set-up key card, under the caption "Opera- 
tion" must be given a description of what the operation is ; 
not its s)mibol. 

Fixture and Die Key Card 

This card (Form 29) is used in connection with the two 
foregoing cards, to record the necessary fixtures and dies 
that may be required for an operation, either in conjunction 
with the tool set-up, or on an independent piece for some 
particular operation. 

From the foregoing descriptions, the relation of the three 
tool and fixture cards can be easily understood, as well as 
their use. It is to be borne in mind that these cards are 
not purposed to be used in connection with the manufacture 
of tools, or for inventory purposes, but solely in connection 
with the use of the tools. 

Operation Studies 

In organizing the work of a production department, the 
operations required in producing the various pieces, parts, 
and units must be filled in direct on the piece, part 
and unit key cards (Forms 20-22) by the drafting or 
engineering department. When this is done, the production 
department should make a careful study of operation per- 
formances in the factory. As a result of these studies, it is 
frequently found that many operations, or the machines 
and tools employed on them, can be rearranged or combined 
in such a way that the work can be done more economically 

and rapidly. 

In analyzing an operation, there are two separate and 
distinct considerations, the one relating to the method of 
procedure, the other to the time required to do the work. 



140 UNIFIED ACCOUNTING FOR INDUSTRIALS 



GROUPING MACHINE TOOL EQUIPMENT 141 



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This necessitates a mechanical or operation study for estab- 
lishing standards, and a time study for establishing costs. 
Taking up the time study, there are two ways in which 
such a study may be conducted: one which treats the 
operation as a whole as illustrated on the "Operation Study 
Card" (Form 30), including the total net time required 
without considering the time needed for the rotations or 
motions made on the operation, and another method which 
takes up, in connection with the foregoing, the rotations 
of the operation and also the motions made by the operator, 
as shown on the "Motion Study Card** (Form 31). The 
practicability of either method depends altogether upon the 
nature of the work and the conditions under which it is 
done. Short runs and a constant change of work make the 
latter method impracticable, whereas long runs on individual 
pieces and operations make it not only desirable but 
necessary. 

Operation Study Card 

In order to determine the operating eflficiency of a plant, 
it is necessary to make complete studies of all operations 
required on pieces and parts, and for this purpose operation 
study cards (Form 30) are provided. These cards, and 
also the motion study cards discussed later in the present 
chapter, are intended to be used on study boards made to 
hold several cards, so that the man making observations 
can carry them conveniently from machine to machine and 
make his notations on them. After the operation study 
has been taken on the card, the information obtained is 
transferred to the operation key card (Form 33), which is 
designed for constant use in the production department in 
making out time tickets and routing the work through the 
factory. 

On the operation study card is given the piece number 



and name, and when the card is finished and brought into 
the production department, it should be given a study num- 
ber, these numbers being given in rotation as the cards are 
received. In case a study is taken to supersede a former 
study, the study number that it supersedes is shown; and 
when this card is superseded by another in its turn, the 
number of the new card will be shown on the superseded 
card so that any study card will show the number of any 
preceding or subsequent study. 

One of the objects in making the study of an operation is 
to determine the size of the lot best handled in performing 
that operation, so that when the study of all the operations 
is completed, the size of the lot which can be put through 
and handled to best advantage for any operation can be 
known at once by reference to the study card. To illus- 
trate, on a job started on an automatic machine, the pieces 
on the first operation may be turned out at the rate of 1,000 
a day, this being a convenient-sized lot for the automatic 
machine ; however, when the next operation in the machine 
department is reached, an average day's work on a hand 
screw machine may be only 200. Again, it may happen 
that for some of the following operations a still smaller lot 
would be found advantageous. To avoid delay and to enable 
the work to be pushed through with the proper rapidity, it 
would perhaps be better to put through lots from the first 
operation of, say, 100, instead of 1,000, as work upon such 
a large quantity would hold up and delay subsequent 
operations. 

In order to handle production on schedule and with a 
knowledge of just what is being made, and to facilitate 
routing, costing, inspecting, etc., in the factory, these lots 
should be maintained in their identity from the first opera- 
tion imtil they are turned into stores as finished. There may 
be some occasions when it will be necessary to split a lot. 






H: 



i : 



I 



142 UNIFIED ACCOUNTING FOR INDUSTRIALS 

but this should be done only in a very great emergency, and 
when done, each split lot should be tagged as "Part of Lot 
No , Production Order No " 

Making the Operation Study 

A special department may be devoted exclusively to 
experimental time study and rate-setting, or this may be 
one of the functions of the production department In 
either case, when the headings of the operation study card 
for the piece to be studied have been made out, the person 
having the study in hand should begin in the department 
of first operation and then observe each operation in the 
manufacture of this piece in sequence, using one card for 
each operation, and making such changes in the manner 
in which the work is done as he finds necessary or econom- 
ical. He enters upon the card the operation number and 
the description of the operation. This description will be a 
general term, as "Mill," "Drill," "Turn," but in addition 
the rotations or steps of each operation must be given Thus 
operation "A" might be "Turn," but this turning, to be 
earned out to the best advantage, should be done on the 
lathe in a certain order or rotation, rotation 1 being "Rough 
Turn Outside"; rotation 2, "Finish Outside"; rotation 3. 
Bore ; rotation 4, "Ream"; rotation 5, "Face Top"; rota- 
tion 6, "Finish Inside"; rotation 7, "Face Bottom"; etc 
The rotation of each operation should be carefully studied 
and, when once decided, the workmen should follow these 
rotations implicitly in the order given; for if in the case 
above bormg and reaming were done first and the turning 
and finishing of the outside afterwards, it might throw 
the piece out of alignment and make the operation un- 
satisfactory. 

..ci'l'"^"^ instances rejections have been reduced 50 to 
65% by a careful study of the rotations of operations. The 



GROUPING MACHINE TOOL EQUIPMENT 143 

importance of a proper rotation of operations cannot be 
overestimated. 

For each operation the machine number and depart- 
ment number should be inserted on the operation study 
card; also the feed, speed, and cut of the machine best 
suited, as well as the fixtures and tools required, thus 
furnishing by operations a complete history for each piece 
as it goes through the factory together with its routing from 
machine to machine and department to department, from 
the first operation to the last. 

When the operation study on a piece is completed, the 
operation study card should be signed by the person taking 
the study and be turned in to the production department. 
Here the data contained on it is transferred to the operation 
key card (Form 33), and from this card entered on the 
piece key card (Form 20), thus completing the information 
on this latter card which is used chiefly by the planning 
clerk. The entry of this information does not, however, 
complete the data for the operation key card which is used 
by the planning clerk, as the time allowance, time study 
number, and wage rate are yet to be entered. 

In a great many cases it will doubtless be found that 
different workmen have different methods of doing the 
same work, and while there is a general standard for the 
operation, yet there is a great deal of variance from this 
for no good reason. It is, therefore, a first essential to 
standardize these operations as they are gone over. The 
man delegated to this work may find that changes in tools, 
fixtures, or speed of machine, or feed, will be desirable in 
increasing the output of the piece, and he should be given 
full authority to make such changes as seem to him advisable, 
after going over the matter with the workmen, foreman, 
and other persons interested. 

The result of this careful study of each piece made, fre- 



BE S 8K » Bi1tBi aa ig'5 !jS~ 



144 UNIFIED ACCOUNTING FOR INDUSTRIALS 

quently develops material economies in operations, together 
with much greater general efficiency and a correspondingly 
increased output. 

When operations have thus been standardized, a com- 
plete history is obtained of all work done in the factory, of 
all machines available for this work, and of all tools with 
which it may be done. 

Motion Study Card 

In order to take the detail of time required for opera- 
tions, a "Motion Study Card" (Form 31) is provided, and 
one of these cards is used for each operation on any given 
piece which requires scientific analysis. A motion study 
card should be made out in full detail in the factory from 
simply observing the operation, but should get its first data 
in the production department from the operation study card 
(Form 30), so that the basis of the study and the motion 
data shown on it will be exactly the same as the instructions 
to the workmen for processing the piece, for which the 
operation study card is the authority. 

The piece number and name, operation number and 
name, and operation study number are taken from the opera- 
tion study card, together with the machine number and de- 
partment number in which the study is made, and all this 
is inserted at the top of the motion study card, and the 
operator's number and name will be filled in after going 
to the department. The speed and feed, as well as the 
fixtures required, must be given for each operation. Then 
the study man will watch the operator set up the job, taking 
the time of same with his stop-watch, time him at least four 
times on each rotation, and also time him on taking down 
the job. The number of pieces made will then be inserted 
in the column following, and the average time for each 
piece in the next column. 



GROUPING MACHINE TOOL EQUIPMENT 14- 

The motion study as now completed is available for 
several purposes : first, for the ascertaining of labor require- 
ments ; second, for the scheduling of labor needed ; and third, 
as a basis for piece or premium work. 

The motion study card shown in Form 31 has been filled 
in with data taken from an actual time study. The details 
of this study as presented are practically self-explanatory, 
it being understood that all figures of time made are shown 
in tenths of an hour. These time studies cover all the rota- 
tions of one operation. 

In order to illustrate further the method of procedure in 
taking time, the motions to these operations, showing the 
use of both the left and right hand, are given in Form 32. 
This illustrates what time and motion studies mean if gone 
into in detail. In actual practice this data should appear on 
the motion study card which should be printed on both 
sides; one side for operation rotation data, the other for 
motion study. 

When the motion study is complete, and the results are 
entered on the motion study card, the card will be signed 
by the person taking the study and turned in to the produc- 
tion department. Here the time allowance will be set, with 
the high rate and low rate of earnings possible under it, 
any further remarks being entered in the last colum.n, if 
necessary. 

In setting the time allowance, consideration should be 
given to the fact that a motion study is usually taken under 
conditions of high tension; that the employee is supposed to 
be working at more than ordinary speed ; and that in most 
cases it would not be possible for a man to average this 
speed all day. Therefore, a time allowance should be made 
for a longer period than that actually observed. This, of 
course, will have to depend somewhat upon the nature of 
the work, the manner in which it is handled with regard to 



146 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



tools, etc. In case the operator should be required to set 
up the tools on his machine, or to leave the machine to 
get tools or materials, the time consumed in this should not 
be included in the time allowance. 

Before leaving the subject of motion study, a word of 
caution should be inserted here. Detailed procedure such as 
that described is not adapted to every kind of business, or 
to every article made. Good judgment is required to know 
to what extent the methods suggested should be adopted in 
actual practice. The fine detail illustrated here should be 
applied only on work which is done on a large scale of 
duplication ; for instance, if a man and machine are put on 
one piece of work for days and weeks at a time, this nicety 
of detail would be of great value; but if it is work that 
changes from day to day, or has short runs, this detail is 
nearly always expensive rather than economical. 

Another caution in connection with work of this char- 
acter relates to the character of the labor employed. Unless 
there is reasonable stability among the operators, there is 
not much profit in educating them to the motion studies 
illustrated. If, for instance, in a factory operating 2,000 
men, 4,000 or 5,000 men are hired annually, the educational 
work required to carry out the detail of time and operation 
studies would cost far more than the savings made. 

Operation Key Card 

This card (Form 33) will show the history of each 
operation as required by its captions, its data being as taken 
from actual observation, or as changed to correspond with 
the operation and motion study cards. The operation key 
card is for the use of the planning clerk in planning work 
for the factory and in making out tracing tags and work- 
men's production orders. He should have on his desk a 
complete file of these operation key cards in the order of 



GROUPING MACHINE TOOL EQUIPMENT 147 

their piece number, and of the various operations required 
for each piece. It is evident, from the purpose for which 
these cards are used, that any changes made in the opera- 
tions must also be noted on this card, so that it will cor- 
respond with the operation study card by which the changes 
were authorized. 

Owing to defective material or for some other reason, 
it will, from time to time, be necessary to make an extra 
operation on some pieces; and in such a case, during the 
time this extra operation is required, a pencil notation of 
the extra operation should be made on the operation key 
card between the others, as operation "A-j^," "B-J^," etc. 

In explanation of the operation key card, it will be noted 
that the data as to the tools and fixtures required are taken 
from the tool key card and fixture key card, and that data 
as to the speed, feed, cuts, and lubricants are taken from the 
operation study card. The operation key card is thus made 
to contain complete information for making out time tickets 
and instructions to workmen not only for doing the pro- 
cessing work, but for the rotation work as well. Further, 
this card has full instructions thereon as to time allowed 
and the wage rate paid. 

Rate Memo 

After all time study work is done, a rate memo (Form 
34) should be made out by the experimental or time study 
department in accordance with its findings, for each and 
every operation. On this slip or card appears definite in- 
formation as regards the conditions under which the opera- 
tion was tested out, and adjustments must be made on fac- 
tory equipment to meet the requirements as to speeds, feeds, 
cuts, etc., of the rate memo. 

The rate memo, as it comes from operation and time 
study work, only shows at what rate work may be done 



II 



148 UNIFIED ACCOUNTING FOR INDUSTRIALS 

per hour or per period of eight hours. The price for doing 
the work must come from the superintendent or from a 
wage board, and be based on the fact that piece-workers or 
premium workers should earn anywhere from 20% to 30% 
more than they would have earned on a day-work basis. 
If milling machine hands, for instance, are demanding $3 
a day, they should be allowed to earn about $4 per day on 
piece-work or premium work. Therefore, the number of 
pieces that can be done in eight hours, divided into $4, is 
the approximate rate which should be set. 

This form is made out in quadruplicate ; one copy of 
which is sent to the accounting department to check time 
and also to make the required postings from the rate memo 
to the rate cards. The second copy is sent to the department 
doing the work, as a notification to the foreman of the rate. 
The third copy is for the files of the superintendent con- 
trolling the department in which the work is done. The 
fourth copy (white cardboard) is kept in the reference files 
of the experimental or time study department. 



. 



CHAPTER IX 

SCHEDULES 

Manufacturing schedules, covering labor, ma- 
terial, and finances, and a consideration of the 
relation of these schedules to each other. 



CHAPTER IX 



SCHEDULES 



Purpose and Scope of Schedules 

In order to standardize production in any plant and 
handle it so as to give constant and full information as to 
manufacturing conditions and results, and at the same time 
yield a maximum output for the investment made, it is 
necessary to put all work through the factory on a schedule 
basis, planning it ahead and purchasing all materials accord- 
ingly. It is thus, and thus only, that assembling depart- 
ments can be assured regular and sufficient quantities of 
material to maintain a constant delivery of finished product. 

Of course, scheduling the production for a factory pre- 
supposes definite knowledge concerning the equipment of 
the various departments, together with standard data as to 
the various pieces, parts, and units to be made, as set forth 
in Chapters VII, VIII. It must, however, be understood 
that scheduling means much more than the mere systematic 
adjustment of all this to the items required for such manu- 
facture. It means the scheduling of material to be purchased, 
together with the delivery dates of same; a scheduling 
of the labor required, and, finally, a scheduling of the 
moneys required to finance these purchases of labor and 
material. In other words, the superintendent or works 
manager of the plant will make up, from the data supplied, 
a schedule of labor requirements showing the number of 
men needed based on the number of man-hours required 
to do the work, without regard to cost. The purchasing 

151 



152 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



SCHEDULES 



153 






agent will make up a schedule of material requirements by 
kind, quantity, and deliveries, irrespective of money values; 
while the treasurer will make up a schedule of financial 
requirements for labor, material, and general expenses. 

Manufacturing Order — Master Schedule 

The first consideration in arranging the systematic 
operation of a plant is the output of each model and unit 
required for each manufacturing year, together with the 
weekly or monthly requirements as to deliveries. Such a 
specification constitutes a manufacturing order and this 
order must necessarily be O K'd by the proper executive, 
usually the general manager, before it becomes effective, 
after which it is to be passed to the production engineer and 
superintendents for scheduling and manufacturing the 
pieces, parts, and assemblies required. 

This primary manufacturing order will in reality be a 
schedule of sales requirements; that is, it will indicate the 
deliveries of the factory as required by the sales department, 
divided into weeks, months, etc., for some definite time 
period (usually a year). This information can be tabulated 
on a schedule sheet similar to that illustrated by Form 35, 
which therefore becomes a "Master Schedule." 

These master schedule manufacturing orders should be 
numbered in rotation, and one made for each different model 
and unit required. When the production engineer receives 
such a manufacturing order, he should issue production 
schedules to show exactly what the factory must produce 
each week and month of the year in order that this output 

may be maintained. 

In case of changes in the manufacturing or sales policy 
of the company during the year, other manufacturing orders 
must necessarily be issued to cover these changes. It should 
be borne in mind, however, that not only deliveries but 



/ \ 



also purchases must be made in accordance with the original 
schedule, so that any change made in the manufacturing 
schedule will affect the kind and quantity of material 
purchased. 

Production Schedule 

The master schedule calls for the total output of each 
model or unit; the production schedule (Form 36) provides 
for the parts and pieces of the models or units called for 
by the master schedule. As soon as a master schedule for 
a completed unit or model has been issued, a separate pro- 
duction schedule should be made out for each part and piece 
required by the master schedule. The manufacturing order 
number appearing at the top should be that of the master 
schedule, and the total requirements for each and every 
piece and part should be shown on the production schedules. 

On the production schedule, the spaces marked "On 
Hand" and "Balance to Schedule" should be filled out only 
when a very excessive amount of parts and pieces is on 
hand, as this information is really meant for use at an 
inventory adjustment period. Under ordinary conditions, 
the stock on hand should be relied upon for repairs, etc., 
and does not enter into the making up of a schedule. 

The rate per day or week at which each piece must be 
manufactured should be shown on the production schedule, 
together with the date that the schedule begins and ends, 
and the number of days it has to run. 

In making up the schedule sheet for each piece, "Total 
Requirements" will be ascertained by reference to the piece, 
part, and unit key cards (Forms 20-22). The piece key 
cards should be gone over consecutively, as they will show 
all the units and parts for which the piece is required, and 
the total number of pieces needed for the units specified 
in the master schedule can be readily determined and shown 



154 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



on the production schedule. For instance, if in September, 
50 of model ''Roadster" are required, 40 of model "Road 
Racer," 60 of model "Juvenile," and 30 of model "Jobbing" 
(making a total of 180 models), on all of which three of a 
certain piece are required, the schedule of this piece for 
that month would be three times 180, or 540. This opera- 
tion is repeated for each of the succeeding months, to cover 
the requirements of all the units or models using this piece. 

This again illustrates very clearly the desirability of the 
"Parts Common to All" plan of manufacturing, in which 
everything is done on a pieces and parts basis, all the 
scheduling, planning, and costing work being shaped to this 
end, rather than by the "Complete Unit" plan, and it need 
hardly be said that a system of manufacturing upon a basis 
of merely keeping machine equipment busy regardless of 
delivery requirements is wholly undesirable. 

To this end, the schedule of each piece should indicate 
the total number required for all units and models before 
the manufacturing orders and production schedules can 
be converted into production orders (Form 40). When 
this plan is followed, each piece will be manufactured as a 
standard piece to be used on different units, and conse- 
quently each piece can be used without regard to which 
particular unit has the greatest sale, provided the number 
of units in the aggregate is up to expectations. Therefore, 
it is perfectly safe to manufacture such a piece in a dull 
season and so give the factory a constant load factor; at 
the same time there is an opportunity to manufacture 
in quantities sufficiently large to obtain a low cost of 
production. 

One of the important considerations from a cost point 
of view is the number of pieces and parts called for at one 
time or in a given production order. With sales rapidly 
increasing or decreasing, it may be a difficult matter to 



SCHEDULES 



155 



handle the manufacture of certain pieces or parts in the 
quantities called for and at the same time obtain the lowest 
cost of production. In such cases it may be that such 
quantities can be bought cheaper outside in a finished 

condition. 

For instance, in the manufacture of a certain piece the 
total requirements for a season might be 2,000. Manu- 
factured in this quantity the cost of production may be 
greater than this piece could be bought for outside. On 
the other hand, if 6,000 of these pieces were manufactured 
at a time, the cost of production might be considerably less 
than they could be purchased for outside. But 6,000 would 
be a three years' supply and the interest on such an invest- 
ment would probably be greater than the saving effected. 
There is also the danger of obsolescence. The necessity is 
therefore apparent of closely watching all of these factors, 
particularly when pieces or parts are run in small batches 
from time to time, or in a small quantity made up for a 
whole season's requirements. 

While, of course, the manufacturing order shows the 
actual sales delivery requirements from month to month, 
it is not often that the pieces or parts required are manu- 
factured at exactly this monthly rate, as this would mean 
anything but a constant load in the factory. On the con- 
trary, a production schedule controlled by manufacturing 
orders should be laid out for such quantities as can be 
made most economically, and in some cases a year's supply 
might be made up at one time, but in so doing machine 
equipment is released during a subsequent period for the 
manufacture of other pieces, which, if this practice was not 
resorted to, might be far behind schedule, thereby holding 
up the complete assembly of units and models. 

The production schedule having been completely planned, 
is then ready for processing operations in the factory, but 



156 UNIFIED ACCOUNTING FOR INDUSTRIALS 

before taking this up, the scheduling of labor, material, and 
financial requirements must be considered. 

Purchase Order Schedule 

The scheduling of material requirements is just as im- 
portant as is the schedule of manufacturing requirements, 
for upon obtaining the right quantities of material at the 
right time all factory operations depend. 

The purchasing agent having been furnished with a 
duplicate of the production schedules by months, will obtain 
from his set of the piece, part, and unit key cards (Forms 
20-22) the exact kinds and quantities of material required. 
He will then make out a schedule sheet (Form 37) for each 
kind of material, either by months or any other time periods 
in accordance with the general purchasing policy. This 
sheet also shows the requirements as to delivery dates and 

payments. 

When making out these schedules, the purchasing agent 
should go over his piece and part key cards in much the 
same manner as the production engineer does, and make a 
list from these key cards of the quantity of material re- 
quired each month for the number of pieces and parts shown 
in the manufacturing schedule. When all pieces and parts 
requiring any particular kind and size of material have 
been gone over, the total quantity is entered on the pur- 
chase order schedule (Form 37) as the total requirements 
for that kind of material. This is then divided into time 
periods, under the column headed "Schedule." The require- 
ments for succeeding months or periods are figured out in 

the same way. 

As soon as purchase order schedules are made out, the 
purchasing agent should issue his purchase orders for de- 
liveries of material according to his schedules. (See Form 
4.) The order number, date, and quantity ordered must 



SCHEDULES 



157 



be entered in the "Purchase Orders Issued" column of the 
purchase order schedule. 

The purchase orders should require delivery of material 
at the factory at least six weeks before the date required 
by the production schedules. This is necessary because the 
production schedule is for completed pieces and parts. The 
manufacture of pieces and parts, in most cases, should begin 
thirty days earlier, and beyond this some allowance must 
be made for delays in delivery. An addition of at least 
10% should be made to the material requirements of the 
production schedules as an allowance for spoilage and 
repair parts. 

As soon as the purchasing agent receives a "Material 
Receipt and Notice" (Form 6) from the receiving clerk, 
he will turn to the purchase order schedule showing this 
material and enter the quantity thus received under the 
column "Received," carrying his cumulative totals forward 
from time to time and showing the number of days ahead or 
behind schedule. This enables the purchasing agent to keep 
a full check on all materials coming in and on material which 
is overdue, thus helping to bring about prompt delivery of 
all materials and preventing delay in the work of the 
factory. 

When the purchasing agent issues purchase orders direct 
from the purchase order schedule without a purchase 
requisition, the stores clerk will enter the quantity ordered 
on his stores record (Form 9), taking this from his copy of 
the purchase order at the time the order is posted, just as 
if a purchase requisition had been issued. His record will 
thus show (when stores "Reserves" against production 
orders issued are entered) the amount of material that can 
be depended upon as available for further production orders 
for any given period. 



158 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Scheduling Labor 

The question of scheduling labor requirements may be 
considered at this point. The superintendent, or works 
manager, having been furnished with a copy of the manu- 
facturing schedule of each piece and part, will be able to 
estimate his labor requirements, by figuring out the man- 
hours required to do the work. 

From the analysis of plant capacity (Chapter VII) it 
will be possible to lay out a general policy for employing 
help and make provisions for securing it whenever it is 
required. 

If, according to the analysis of plant capacity, it is 
found that the manufacturing schedule calls for more output 
than the machine or possible m^an capacity warrants, the 
superintendent should at once take the matter up with the 
purchasing agent so that he may arrange to purchase out- 
side such parts as cannot be made advantageously in the 
factory under existing conditions. 

Most manufacturing concerns have been in business 
for a considerable period of time and have in their pos- 
session data concerning costs and the time required for 
the operations on each piece and part. With a definite 
schedule of daily, weekly, and monthly requirements, it is 
by no means a difficult task to figure out from the produc- 
tive labor costs just what labor is required to process any 
given schedule; and as operations are always confined 
definitely to departments, the cost per department is also 
easily obtained. For instance, if 50 men are employed in a 
certain department to meet schedule requirements and the 
pay-roll shows that the average wage is 35 cents per hour, 
the hourly, daily, weekly, and monthly costs of productive 
labor for the entire department can be quickly figured, as 
well as the man-hours required to do the work. From this 
data the number of men required for a given amount of 



SCHEDULES 



159 



J 






work to be done in a definite period of time can easily be 
determined. 

The amount of all non-productive labor employed in 
the factory is shown on the ''Overhead Distribution Sheet" 
(Form 77). From this can be obtained the non-productive 
labor costs of each department, and the number of men re- 
quired for non-productive work, by departments, and also 
for the factory in general. 

To aid in checking labor performance, a schedule of 
labor requirements may be made out, or these data may be 
plotted on a cross-section chart and then checked against 
the actual performance from week to week and month to 
month. 

Since processing requires the combination of machines 
and labor, the amount of labor to be employed depends 
upon the machine capacity available. 

The time that it will take to get out any schedule de- 
pends, of course, upon the number of men utilized. If it is 
desired to manufacture units or models requiring $50,000 
worth of productive labor, and if the average wage is $3 
per day and 100 men are employed in processing, the num- 
ber of days required to produce the schedule is found by 
dividing 50,000 by 300, or 166 J^. In other words, when- 
ever productive costs are known on any item of manufac- 
ture, time periods for the schedule depend upon the number 
of men that can be employed on the w^ork. Hence, it is 
imperative to know exactly what the plant capacity is, as 
discussed in Chapters VII and VIII. 

Scheduling Financial Requirements 

It is the function of the treasurer to provide for the 
financial requirements of both labor and material. Having 
been furnished with copies of the master schedules and also 
having the production schedules for pieces and parts, he 






;ii 



l6o UNIFIED ACCOUNTING FOR INDUSTRIALS 

will be able to estimate the amount of money required to 
pay both for labor and material for the entire year, as 
shown in the following illustration: 

Supposing that a schedule calls for 10,000 of a certain 
piece ; that according to the time study cards and operation 
key cards, the total number of man hours allowed for each of 
these pieces is five, and that the average wage as shown by 
the time study and operation cards is 24 cents an hour ; the 
approximate labor cost of each piece would then be $1.20, 
or $12,000 for the total quantity of 10,000 pieces. 

By going over each piece and part as specified on the 
production schedule, the total money required for the pro- 
ductive labor for the year can be easily computed ; and non- 
productive labor by departments, as shown on the overhead 
distribution sheet (Form 77), can then be anticipated and 
added to these productive labor requirements. 

These data should be transferred to a graphic chart that 
will show separately the weekly and monthly pay-roll re- 
quirements (both productive and non-productive), and then 
the actual pay-roll should be checked against it from pay 
period to pay period. 

As soon as costs of all pieces and all departments have 
been ascertained, the amount of labor required for any 
schedule can be immediately determined and an absolute 
check kept on the factory in regard to the use of labor. 

A further check on factory labor as between productive 
and non-productive, and as between the various kinds of 
work done, is described in Chapter XII, "Distributions." 
So complete is this check, that no matter what the variation 
is from predetermined labor requirements, it is possible 
immediately to discover the department, the foreman, and 
the individual operator responsible for the variation, and 
the particular order or piece, the cost of which is affected 
by this variation. 



SCHEDULES 



i6i 



When the material deliveries have been scheduled by 
the purchasing agent (Form 37), their quantity, plus the 
price, will enable the treasurer to lay out his schedule for 
financing the purchase of this material according to the time 
periods shown. 

Importance of Schedules 

The importance of these schedules relative to labor, 
material, and financial requirements cannot be overesti- 
mated Together with the other data of income and ex- 
penditure as shown in the monthly balance sheets, they will 
give the treasurer definite information as to financial re- 
quirements for long periods in advance and often enable 
him to secure decided advantages in placing contracts. 
Then with these materials delivered according to schedule, 
the factory, as already stated, is in a position to manufacture 
on the most economical basis as regards both labor and 
material, and the production department can be utilized to 

its greatest efficiency. 

To sum up, the schedule method puts into a manager s 
hands a means for predetermining achievements^the 
results which can be derived by certain combinations of 
labor, material, equipment, and output. Then, as means 
have been provided for checking up these results from day 
to day, adjustments can be made as they are needed, either 
by changing the schedule rates for men to be employed, or 
the quantity of material required, or by an increased effort 
in the sales department, so as to maintain an even factory 
output with a corresponding uniformity in cost and conse- 
quent profit to the company. 

Graphic Charts 

Charts are frequently used in connection with schedules, 
and two of these are shown in Forms 38 and 39. Both of 



l62 UNIFIED ACCOUNTING FOR INDUSTRIALS 



SCHEDULES 



163 



these charts are of an entirely new type, inasmuch as they 
are a combination of calendar time and numerical quantities. 
In a chart such as Form 38, to the left of the sheet, space 
is provided for a vertical column of figures and, at the top, 
space is provided for a horizontal row of figures, while the 
main body of the chart is divided up vertically in calendar 
time by months, weeks, and days, and horizontally by work- 
ing time of six days to the week. Each small square repre- 
sents a day either vertically or horizontally, and it also 
represents a number corresponding to whatever figure is 
written in the left-hand column imder units, in the same 
sense that it corresponds to the number at the head of the 
columns from 600 to 31,200 inclusive. 

The component schedule illustrated in Form 38 is plotted 
from a production schedule. The number required cumula- 
tively from week to week is shown by the numbers at the top 
of the sheet. The figures shown there represent the number 
of components or pieces that are to be processed and com- 
pleted within the tln:c periods indicated in the month, week, 
and day columns. On the left-hand side of the chart are 
shown the names and numbers of the operations that are 
to be performed on the component or pieces in question. 

The straight oblique lines indicate the schedule time 
periods for the complete processing of each component. In 
other words, between the first operation and the last opera- 
tion there is a uniform lime lag (including Sundays) of 
sixty days; that is, it takes sixty calendar days to produce 
this particular component. The finishing operations shown 
on the chart in January cover work begun at an earlier date 
and the first operations on this component would be shown 
on the preceding chart commencing November 1. 

The heavy black lines are plotted against the oblique 
lines, and show to what extent the component in its progress 
is ahead or behind schedule requirements. Beneath these 



plotted lines is a line called "Component Stores," which 
means the same thing as ''pieces and parts stores" or "semi- 
finished stores," whereby is shown the number of days the 
component stores are ahead of manufacture. Beneath the 
component stores line is a base line which simply means 
that, if this line is reached, assembling will have to be 
stopped as there will be nothing in component stores from 
which to draw. This, as shown by this chart, was actually 
the case in the week ending February 5. 

The purpose of this chart is to check up from week to 
week or month to month, as the case may demand, the 
various operations on each component, and to find out to 
what extent the factory is maintaining a uniform balance or 
flow of product. To illustrate this, the week beginning July 
1 showed that there was a drop-off on operation No. 9. It 
is at a point like this that attention should be centered in 
order to move the operation up to balance. It should be 
noted that all operations done in the drop-forging shops are 
prefixed by the figure 10, thus running from 101 to 105 
inclusive, as at this point the component goes into temporary 
storage, and is from here given to the machine shops under 
a new production order and lot number. 

The chart illustrated in Form 39 shows the actual 
unit requirement per week as plotted from a master 
schedule ; the numbers in the spaces at the top of the sheet 
indicating the quantities. Line A is the weekly schedule. 
Line B shows at a glance how many days manufacturing is 
ahead of this schedule. To illustrate, in week ending Jan- 
uary 15, the schedule was exactly two weeks, or 12 days, 
ahead of manufacture, while for week ending May 6, the 
schedule was 2 days behind. Line C shows, as per vertical 
numerical column, the number of complete units assembled 
each week, while Line D shows the total units that were 
good. In other words, the difference between C and D is 



I.: 



l64 UNIFIED ACCOUNTING FOR INDUSTRIALS 

the amount that was thrown out for various reasons. Line 
E shows the percentage of good units obtained, as per the 
percentage column at the right-hand side of the sheet. 

The data represented by Hues F and G are of interest 
and importance. Line F, in accordance with the column 
numbered on the left of the sheet, shows the number of men 
employed daily, while G shows the number of units output 
obtained per man. A comparison of these lines may bring 
out many interesting points. For instance, in the week 
ending February 26 the number of men employed was 
2,900 (line F), and of the 6,000 units produced, as shown 
by line C, only 3,600 units were good (D). On the other 
hand, in the week ending November 25, 2,500 men were 
employed with a total production of 6,500 units, out of 
which 5,800 units were good. 

Turning to line G, it is seen that the output per man 
was lowest during the period April 8 to 22, and highest 
during the week ending August 12 and also from November 
18 to 25. This chart then shows at a glance the efficiency 
of the labor force employed during a long period of time 
and will no doubt prove of value to the factory superin- 
tendent or manager of works. 

Similar charts can be plotted so as to show the schedule 
for labor, material, and financial requirements, and the 
actual performance can be checked against these. 



CHAPTER X 

CONVERTING LABOR, MATERIAL, AND 
EXPENSE INTO FINISHED PRODUCT 

A method for issuing production and other 
orders to a factory as a whole, and to indi- 
vidual workmen, together with various forms 
of collecting the time of employees; also an 
illustrated description of planning methods 
and of planning or control boards. 



CHAPTER X 

CONVERTING LABOR, MATERIAL, AND 
EXPENSE INTO FINISHED PRODUCT 



Classification of Orders 

In the handling of production orders, it is usually neces- 
sary to confine the work to one method of procedure. This 
method is prescribed by a central planning station which 
directly controls all the work throughout the factory, or 
controls it through several sub-planning stations. In either 
case the method of procedure would be uniform throughout 
the factory, because the sub-planning stations are under the 
general control of the central planning station. Also the 
data employed on the forms to be used are identical. Which 
method of handling production orders is the better, is a 
question of organization and beyond the scope of the present 
work. The consideration here is the actual putting of 
work through the factory, and provision for all the detail 
necessary thereto. 

It is taken for granted that a stores system has been 
established in such a way as to give a perpetual inventory 
of all materials and supplies that the company may buy, and 
that this inventory is held in a controlling account. Under 
these conditions, in order to authorize the delivery of 
material to the factory, it is absolutely necessary for costing 
and accounting purposes to have an order of some kind to 
which all material, labor, and expense can be charged, and 
these orders must be known and controlled by consecutive 
numbers. 

167 



l68 UNIFIED ACCOUNTING FOR INDUSTRIALS 

To cover all labor, material, and expense used in the 
operations of a factory, four different conditions must be 
provided for, these requiring four different kinds of orders. 
( See also Chapter IV. ) 

1. Production Orders. These orders relate exclusively 
to goods made for sale, where the exact amount of labor 
and material required for production can be charged. Such 
orders are issued to cover whatever quantity, kind, or size 
of unit, piece, or part it is desired to make at any particular 
time; and all material drawn from stores, and the labor 
used for processing it, must be charged to these production 
orders as production costs. In addition to this, a prorated 
amount of overhead must be charged as described in 
Chapter XII, "Distributions." 

2. Betterment Orders. These orders relate wholly to 
such plant improvements as increase the capital investment 
of the company. Whenever any work is to be done which 
will effect a plant betterment, a betterment order must be 
issued therefor by the proper authority, and to such order 
must be charged all of the material drawn from stores for 
use thereon, all of the direct labor employed in its 
execution, and a prorated amount of overhead, the same 
rate as applied to regular production orders. 

3. Repair Orders. These are orders issued for the 
replacement, repair, etc., of buildings and equipment, and 
are designed to take care of all repair work done for, or by, 
various departments. To each individual repair order 
should be charged all of the material drawn from stores 
and all of the labor employed; but repair. orders do not 
bear any portion of the general overhead charge, as repairs 
in themselves constitute a portion of such charges, which in 
turn are distributed to production and betterment orders. 

4. Prorating Orders. These orders are designed to 
cover productive work that is done in bulk and prorated 



I 



i 



LABOR, MATERIAL, AND EXPENSE 



169 



over the product made, such as painting, enameling, plating 
work, etc. 

Production Orders 

Production orders authorize work to be started in a 
factory. A production schedule (Form 36) for all the 
pieces and parts required having been prepared, the next 
step is to prepare and issue production orders (Form 40). 
This form is provided in quadruplicate, each copy of a 
distinguishing color, as green for the original, blue for the 
second copy, pink for the third, and buff or yellow for the 
fourth. The back of this yellow card contains data taken 
from the tracing tag (Form 43). 

With a production schedule in front of him, a schedule 
clerk can make out a production order for each of the pieces 
and parts required to be made, the quantity specified on a 
production order being ordinarily about a twenty-five or 
thirty days' run. This is because it is desirable to have 
production orders cover such quantities as can be costed 
out within a month, if possible; that is, a complete produc- 
tion order should be finished and turned into stores within 
a month from the time of issuance. Of course, if a steady 
run is being made on these parts, it would simply mean 
operating from one production order on to another, and 
each of these orders would be finished and costed out about 
every thirty days, so as to leave the amount shown in "Work 
in Progress" or "Unfinished Production Orders" at the 
end of the month, as small as possible. 

Production orders should be numbered consecutively, 
and, if they are issued in supplement to some previous pro- 
duction order, the number of this previous order should be 
shown after the "Supplement Number"; also the date of 
issuance and the account which is to be charged (whether 
component or finished stores) should be given, and, if the 



I70 UNIFIED ACCOUNTING FOR INDUSTRIALS 

production order is issued for the filling of some particular 
sales order, this sales order number should be shown. Then 
the quantity called for. the piece or part number, the 
specifications, and special features or instructions will be 
entered. 

The original copy of each production order should be 
kept in the production department and filed consecutively 
by order number. When the order is completed, if desired 
the cost for labor, material, overhead, total cost, and unit 
cost can be entered, and the order filed in the superin- 
tendent s or production engineer's office. When issued, the 
third or pink copy should be sent at once to the stores clerk 
in charge of the particular stores room from which the 
material for this order will be drawn. This will be his 
authority for issuing the material called for by the order 
and he should file the same by the order number 

M t' r""^/] ^ P'^^"^^^^" ^^^^^ is completed, the stores 
clerk should forward this copy, together with his sheet 
showing material distribution on this order (Form 16), to 
the distribution department for a proper distribution of 
costs The second or blue copy should be filed by order 
number in the distribution department, and when work on 
the order is completed, it should be turned over to the 
production department with the total labor by operations 
shown. The fourth or yellow copy is kept in the production 
department and filed by piece and part number and thus 
becomes a working copy for the use of this department. 

Tracing Tag 

^ A tracing tag form has been provided (Form 43) which 
IS to be attached to each lot of material at the time it is 
issued from stores and before the first operation. After 
once being attached to any particular lot of material, the 
tag must remain with it until the work on the lot it covers 



LABOR, MATERIAL, AND EXPENSE 



171 



is completed and is delivered either to component or to 
finished stores. 

The purpose and method of handling the tracing tag 
are as follows: When the production department is ready 
to issue a production order, it prepares from piece key cards 
(Form 20) one tracing tag for each lot of each piece 
covered by the production order, and, as provided for on 
this tag, there should be shown the piece number, quantity 
to be started, production order number, lot number, date 
to be started, and date to be finished, together with such 
other information relative to the departments in which the 
various operations are to be performed on the work as may 
be required. 

As soon as these tags are made out they should be posted 
to the reverse side of the fourth or yellow copy of the 
production order, where provision has been made under 
"Started" to show the lot number, date, quantity, etc, 
together with the cumulative quantity as the work pro- 
gresses. After these tags have been duly posted, they are 
ready to be turned over to the planning and routing clerks 
for the issuing of production tickets (Form 44-46) as 
called for by the operations on these tags. As soon as the 
routing clerk receives tags of this character, he will post on 
to them from his piece key cards, the operations required 
by number and name, and also enter on the tag in proper 
order of arrangement, department number, machine num- 
ber, etc., for each and every operation, going to the reverse 
side of the tag with the operations if necessary. 

As stated before, the tracing tag is to be retained with 
the particular lot to which it is attached through all opera- 
tions through which that lot goes, and it must show the 
O K check of an inspector for each operation, also the 
inspector's notation, as "Recovered from Repairs," "Re- 
jected for Repairs," "Rejected for Scrap," together with 



172 UNIFIED ACCOUNTING FOR INDUSTRIALS 

the date the inspection was made as indicated by the 
inspector's initial or punch. 

When each lot is completed and received in component 
or finished stores, the pieces are counted by the stores- 
keeper and this count entered on the tag, together with the 
bin number in which they are placed. The tag is then 
dated, signed, and turned over to the stores record clerk 
for entry on the stores records, after which it is forwarded 
to the production department where the routing clerk will 
enter on the back of the production order the quantity 
finished in this particular lot. Thus, on each production 
order there will be a complete record of the work started 
and completed, this record also serving to give the routing 
clerk full information as to the balance of lots to be done 
numbers of these lots, etc. Great care should be exercised 
m making out these production cards accurately, as they 
are the key to the proper handling of all work in the factory 
Whenever work is completed, the tracing tags should be 
filed consecutively by production order number and lot num- 
ber, for future reference as to how work has been handled 
regarding rejections for repairs, scrap, etc. 

Issuing Material Requisitions 

After the tracing tags are made out, general stores 
requisitions for the material on the piece key cards must also 
be made out (Form 10). The requisitions should be 
numbered, this number being a combination of the produc- 
tion order number, the letter of the operation for which the 
material is used, and the highest lot number for which this 
requisition will furnish material. Thus, if a requisition is 
made out for material required for the first operation on 
production order No. 1000 for five lots, the requisition 
number would read "lOOO-A-5." When later five more 
lots are started, the requisition for these second five lots 



LABOR, MATERIAL, AND EXPENSE 



173 



would read "1000-A-lO," as being enough material for 
the completion of the tenth lot of this production order. 
These requisitions may then be turned over to the plan- 
ning clerks with the tags. 

Production Tickets and Daily Time Slips 

As a standard practice, labor is paid 6y any one of 
three methods, viz., day-work, piece-work, or premium 
work. No matter which of these methods is used, the 
issuing of instructions for doing the work, would remain 
unchanged, as well as the counting of the quantity done, 
and the record of the time consumed. However, the method 
employed for calculating the amount to be paid would be 
different in each case. 

The different methods of paying labor have been so 
well covered by excellent literature and lectures as to make 
unnecessary any description here. There is, however, a 
production ticket (Forms 44-46) for each one of these 
methods, each ticket being properly spaced and captioned 
on the time-keeping side, so as to make possible correct 
and rapid computations. These time tickets are in them- 
selves explanatory. On the instruction side, the data called 
for are identical for each one; therefore, in this respect a 
description of one is a description of all. 

These cards represent to a certain extent ideal arrange- 
ment and captioning. However, the same information 
could be presented in different shape and it is often neces- 
sary to do so when designing time tickets to be used on 
or by certain accounting machines and time or cost clocks. 
It is recommended that, wherever possible, time be kept by 
the unit system of tenths for which most efficient appliances 
have been made by the manufacturers of time-keeping and 
accounting machines. 

As soon as the routing clerks have received a tracing 



174 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



LABOR, MATERIAL, AND EXPENSE 



175 



I 



tag and have entered the department numbers and machine 
numbers on this tag for each of the operations to be done, 
they should make out, from operation key cards, instructions 
for the manufacture of the pieces and parts called for on 
the tracing tag, these instructions being given on the day- 
work production ticket (Form 44), or the piece-work pro- 
duction ticket (Form 45), or the premium work production 
ticket (Form 46). 

The production ticket number, as will be noted on the 
ticket, should be a combination of the production order 
number, the operation letter, and the lot number, thus saving 
the necessity of writing these numbers on another part of 
the ticket. This greatly simplifies the work of keeping costs 
of labor. To illustrate this system of numbering, ticket 
No. 1500-A-l would signify that this ticket was made out 
to cover work on production order 1500, operation A, and 
lot 1. These tickets can be made out for all of the opera- 
tions of one lot at a time, and would be numbered 1500-A-l, 
150a-B-l, 1500-C-l, 1500-D-l, etc. 

After tickets have been made out for each of the opera- 
tions of any particular lot, the same process can be gone 
through in making out tickets for each operation of lot 
No. 2, and so on for each of the lots called for by tags. 
The date of issue should be shown on the ticket, as well 
as the date the operation is to be completed according to 
schedule requirements. The department number and the 
machine character number for doing the work will also be 
entered, but the man's number should be left blank to be 
filled in by the operating department where the work is to 
be done. The quantity wanted, piece number, and piece 
name can be given and the routing shown, that is, "Moved 
from Department No ," and "Moved to Depart- 
ment No ," etc. Below this will then be given 

instructions for the work required, all of which is to be 



copied from the operation key card (Form 33), or from 
the assembly operation key card, for all assemblies of pieces 
and parts. The speed and feed of the operation should 
also be shown, together with the jigs, dies, or special tools 

required. 

The rotation of the operation given on the production 
ticket should be followed exactly by the workman, as the 
card constitutes his instructions for doing the work, and 
these instructions should be made out exactly as shown 
on the operation key card. 

Each production ticket must be made in duplicate; a 
thin, white original, with a cardboard duplicate underneath 
on which is made a carbon copy. The cardboard copy is 
used as the workman's instruction card. The original 
white copy is posted on the control board (Form 60). When 
work is given to a workman, he will be given the duplicate 
cardboard production ticket showing his instructions, which 
will be held by him until the operation it covers is com- 
pleted. When the workman has completed an operation, 
however, this instruction card will be returned to the plan- 
ning board and the workman will receive a new one for 
some other work. When the instruction card is turned in, 
no matter whether it be on the date of issue or some subse- 
quent date, it must be timed out for checking purposes and 
must be immediately forwarded to the accounting depart- 
ment. 

Meanwhile, the white slip remains posted on the control 
board (Form 60), i.e., is pasted on the envelope in the 
pigeonhole, and if the work called for on any particular 
ticket runs for more than one day, the cardboard copy will 
remain in the workman's box or pigeonhole, but a daily 
time slip (Forms 47-49) for that workman must be made 
out and turned into the accounting department each day. 
By working thus, it is possible to keep absolute control of 



176 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



LABOR, MATERIAL, AND EXPENSE 



177 



4 ■ 



all inventories, so that on the last of the month the tickets 
of each and every workman will have been turned in and 
will be closed out into Production Orders Finished or Un- 
finished, as the case may be. 

When all of the operations on a piece have been com- 
pleted, as called for by the tracing tag, this will be O K'd 
first by the stores-keeper, who will have received the 
material into the stores, and then by the routing clerk, who 
will close it and, together with all the tickets and slips, send 
it to the planning department where it will be filed for future 
reference. 

This method of procedure means that the workmen will 
not be responsible in any way for keeping time, as he simply 
has an instruction card which he holds until he has com- 
pleted the work, when he receives another instruction card. 
Meantime, the planning station will do all the timing on 
both the instruction cards and daily time slips and turn 
them in to the accounting department. 

After an operation is completed, the production ticket 
and tracing tag will be turned over to the inspector, together 
with the pieces which have been made, and as soon as these 
have been inspected the inspector enters on this production 
ticket at the bottom the date finished and the number re- 
jected for repairs, rejected for scrap, and the number good, 
either signing this ticket or punching it with his individual 
punch. At the same time, he makes the same notations on 
the tracing tag, showing the number "Rejected for Repairs" 
at this operation and also those "Rejected for Scrap"; he 
then enters on the line showing the next operation, the 
quantity "Good" which are to be forwarded for the next 
operation. He will then enter the date on the line above 
with his inspector's punch or initials and pass it on to the 
workman of the next operation. 

The production ticket is now ready for the production 



department and should be placed in the outgoing mail boxes 
for the messenger's next trip. 

The daily production time slips (Forms 47-49) should 
be sent to the time-keeping department once a day; each 
morning all slips should be placed in the out-going mail 
box so that a messenger can take them to the time-keeping 
department, where the total time for the day as shown by 
the workmen's time slips, or non-productive, etc., time 
tickets (Forms 50-55) will be checked against his total 

clock time. 

When a workman has completed a job and returned 
his production ticket to be stamped "Finished," the planning 
clerk should, at the same time, withdraw another production 
ticket from his "Jobs Ahead" file for this workman to 
operate on, and stamp it "Started" at the time the other is 
stamped "Stopped," so that there will be no delay in waiting 
for jobs. 

The planning clerk in each department should have a 
list of the piece and part numbers and the operations that 
can be done on each of the machines in his department. 
This table should be always in front of him so that he can 
tell at a glance, when a workman comes for a production 
ticket, just what pieces and parts can be done on any work- 
man's machine, and, consequently, know what production 
tickets to take out of his "Jobs Ahead" file. 

Daily Defective Repairs Time Ticket 

Defects in articles manufactured are continually occur- 
ring, due either to poor workmanship or to poor materials. 
In some instances these defects will make necessary the 
scrapping of the items; in other instances they can be 
recovered by applying certain repairs. These repairs, how- 
ever, must be handled entirely separate from the regular 
productive work; otherwise any increase in the cost of 



f: 



I 

II 



lyg UNIFIED ACCOUNTING FOR INDUSTRIALS 

manufacture due to such defective material or workman- 
ship cannot be readily traced. 

In order to handle this work, a special daily defective 
repairs time ticket (Form 50) has been designed. Each 
foreman should be provided with a pad of these tickets and 
should use them for this work, and for nothing else, as 
indicated by the captions thereon. The department and 
the man's number should be entered, time started and 
stopped stamped as on regular tickets with the time clock, 
provision being made for two starts and stops on the same 
job. The amount column is left blank to be filled in by the 
timekeeper later. 

Great pains must be taken by the foreman to get the 
number of pieces repaired registered on this ticket, together 
with the piece number and the production order number 
from which the pieces originally came. Wherever possible, 
the costs for such repairs should be charged to the original 
production order under which the pieces were first started. 
Like all other time tickets, these must be turned in daily 
to the timekeeping department after being properly O K'd 
by the foreman. 

Daily Waiting Time Ticket 

This ticket (Form 51) is of much more importance than 
perhaps appears at first thought. It is, of course, necessary 
to have time spent in the factory checked against the *Tn" 
and "Out" clocks. It is also necessary to provide registra- 
tion for the time lost by workmen waiting for jobs, 
materials, tools, or for any other reasons. The daily wait- 
ing time ticket is to be used whenever a workman has to 
stop work and wait for any reason, as the time sheet (Form 
73) is arranged to separate for each pay period all of this 
waiting time, by men and by departments. This makes 
gossible a splendid analysis of lost time of this character 



LABOR, MATERIAL, AND EXPENSE 



179 



which can be charged directly to bad forcmanship or a 
laxity of some kind on the part of the planning department. 
These tickets, after being O K'd by the foreman, must be 
turned in daily to the time-keeping department. 

Prorating Orders 

Thus far, consideration has been given principally to 
the manufacture of articles on a strictly production order 
basis. There are often instances, however, where it is not 
practicable to handle certain classes of work on a basis of 
production orders, owing first to the irregularity with which 
the work is put through a factory, and, second, to the nature 
of the materials used which can only be costed out on some 

prorating basis. 

It becomes necessary, therefore, to make provision for 
the establishment of certain prorating orders to which 
certain definite kinds of work are to be charged, with the 
understanding that these prorating orders are always for 
productive work only. For these, no special form need be 
provided, as they simply require typewritten instructions 
from the proper authority for their installation. As all 
have different numbers, they become known through use 
from month to month and from year to year by their 
constant number. Therefore, all that is necessary for 
collecting the charges to them is to send a copy of these 
numbers to the production engineer, time-keeping depart- 
ment, and any other department which might be affected 
by them. 

The manufacture of almost any product involves more 
or less work of this character. For instance, in the bicycle 
business, enameling is one element of this kind, also nickel- 
plating. Enameling should constitute one prorating order 
under a given number, and nickel-plating should constitute 
another prorating order under another number; the total 



l8o UNIFIED ACCOUNTING FOR INDUSTRIALS 

expense for each one of these should be prorated over the 
entire output made each month. Painting in many lines of 
work should be handled in the same way. 

Sometimes it is necessary to create prorating orders in 
connection with automatic machine departments, as in such 
work one man frequently attends several machines, and to 
divide up the time of each man according to the particular 
machine on which he may be working, is rather a difficult 
and unsatisfactory process. Therefore, it often proves 
advantageous to take all this work and charge it to a pro- 
rating order, while at the end of the month the expense to 
the total number of pieces made is prorated according to 
the capacity of the various machines used in making these 
pieces. 

This question of shop practice is touched upon at this 
point simply to illustrate the truth of the old saying, that 
every rule has an exception ; prorating orders are the excep- 
tion to standard production orders. 

Daily Prorating Order Time Ticket 

For the recording of time spent on prorating orders, a 
daily prorating order time ticket has been designed (Form 
54), which can be issued through the regular channels of 
planning work or provided by the foreman of each depart- 
ment according to the nature of the business and the neces- 
sities of each case. This ticket is handled like all other 
tickets, by stamping time "Started" and "Stopped" on it, 
and filling in such information as is called for on the 
form. 

Daily Non-productive Labor Ticket 

There still remain for consideration certain phases of 
non-productive labor, i.e., labor spent on plant betterments, 
and labor on plant repairs. Labor on plant repairs is, of 



LABOR, MATERIAL, AND EXPENSE 



i8i 



course, non-productive, but is in a class by itself and is 
handled entirely apart from any and all labor that is 
regarded as strictly non-productive labor such as clerks, 

oilers, etc. 

The ticket shown in Form 55 covers all non-productive 
work and should include all labor used in the factory not 
provided for by other tickets. Neither this nor any other 
tickets need be used for distinguishing non-productive em- 
ployees who are at all times doing the same class of work. 
By this is meant such employees as clerks, foremen, stores- 
keepers, oilers, window washers, etc., as the distribution of 
their time can be made from the "In" and "Out" time 
clock record. But this non-productive labor ticket should 
be used by all employees whose time may be divided between 
regular non-productive, productive, and betterment and re- 
pair work, such as millwrights, electricians, and ordinary 
productive employees who are occasionally engaged in non- 
productive work. These tickets are used the same as any 
other time tickets, by being properly stamped "Started" 
and "Stopped" and by having the information called for 
thereon filled in. 

Plant Betterments and Repairs 

In any factory there are from time to time plant better- 
ments, that is, betterments made by the company itself. As 
these betterments form an asset to the company, they are 
just as much productive work as are the goods made for 
sale, and consequently the labor and material used must be 
costed up in exactly the same way. In order, however, 
that there may be no mistake in making distributions to 
such work, a separate order is provided, which, inasmuch 
as an authorization must be granted for making each better- 
ment, is handled a little differently from a production order 
in issuing it to the factory. 



lg2 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Betterment Orders 

These betterment orders are made out in quadruplicate, 
and should be numbered consecutively, and dated ; in case a 
betterment order is issued as a supplement to a previous 
betterment order, the previous order number should be 
given after the "Supplement Number/' The account to be 
charged, such as "Machinery and Tools," "Shop Fixtures 
and Fittings," etc., is to be given, and the authorization 
number, if any, together with the bill of material or requisi- 
tion number. The date to be completed should also be 
shown. There should be given a complete description of 
the work to be done, together with a general specification of 
the materials required. (See Form 41.) 

The original (green) copy of this form should be 
delivered to the department which is to do the work, and, 
when this work is finished, this copy should be sent to the 
chief stores clerk, who will enter his material costs on it 
and send it to the accounting department. The third 
(pink) copy is to be delivered at once to the chief stores 
clerk, who will deliver the material required for any better- 
ment, upon presentation of proper requisition. The second 
(blue) copy of the order must be delivered to the drafting 
department for any drawings or other information which 
may be required for the carrying out of this order. The 
fourth copy (manila card) will be given to the accounting 
department as authorization for labor charges. When the 
work is completed, costs will be entered on this manila card, 
which is then turned over to the production department for 
recording purposes. 

When work in the shape of a betterment is completed, 
it does not pass into component stores or sales as does a 
regular product made for sale, but "Work in Progress" is 
credited, and the various investment asset accounts are 
charged. If the betterment is for machinery bought and 



LABOR, MATERIAL, AND EXPENSE 



183 



installed in the plant, all the material, the machine itself, 
fittings, etc., and the labor of installing it, are charged to 
the betterment order, and the total cost in turn is charged to 
the "Machinery and Tools" account. If a betterment is 
for additions to a building, the betterment order will be 
charged to "Buildings" account; thus, it is taken out of 
"Work in Progress" and charged as an asset and is shown 
in the balance sheet every month, as provided for in the 
controlling accounts. 

In order to get the monthly extensions for betterment 
orders, they may be entered under a separate heading, on 
the same sheet as is used for production orders, namely, 
the "Record of Production and Betterment Orders," which 
is described in Chapter XII. However, it is better to keep a 
separate monthly sheet for betterment orders, so that they 
will not be confused with production orders. 

Daily Betterment Time Ticket 

This form has been provided for the recording of all 
time spent on betterment orders. (See Form 52.) Each 
foreman whose workmen have occasion to do any better- 
ment order work is provided with these tickets in pads, and, 
as soon as a workman starts on any betterment work, the 
"Time Started" will be stamped on this ticket, and the 
man's number, department number, and betterment order 
number are also entered thereon. Under "Description of 
Work" will be shown the nature of the work and the depart- 
ment for which the work is done. When the workman 
stops on this work, the time will be stamped on the ticket. 
These tickets must be turned in daily to the timekeeper after 
being O K*d by the foreman. 

Plant Repairs 

Plant repairs are authorized and carried out in exactly 



« * 



184 UNIFIED ACCOUNTING FOR INDUSTRIALS 

the same way as plant betterments ; that is, an authorization 
is obtained to do any extensive repair work and the repair 
order is then issued; but as all work of this nature is a 
general overhead expense, the material and labor used are 
charged to the proper account as provided for in the inven- 
tory classification of assets, and the total expense for work 
of this kind is charged to the same account at the end of the 
month. 

A repair order form has been provided for making out 
orders to the factory for plant repairs. These orders are 
made out in quadruplicate and handled in exactly the same 
way as are the betterment orders, described above. (See 
Form 42. ) 

It is often the case that for several months few repairs 
will need to be made, and then in some one month a large 
amount of repairs may become necessary ; therefore, instead 
of charging up the actual repairs as they are made, reserves 
for depreciation have been provided for all investment 
assets, such reserves being figured out on the basis of the 
estimated hfe of the investment covered. These reserves 
are charged into the general overhead each month, thus 
making for uniformity of costs. Then each month, as 
repairs are made, they are charged against these deprecia- 
tion reserves. To illustrate, a machine valued at, say, $3,000 
gets into such a condition as to require a complete over- 
hauling at an expense of, say, $500. Now, it is obvious 
that it would not be fair to charge all of this expense to 
one month's operation, as the benefits derived from such 
repairs will continue for a long period. Therefore, the 
necessity for such repairs, even to the extent of completely 
replacing this $3,000 machine at a given time, must be 
anticipated. A monthly amount for such depreciation is 
credited each month into a "Reserve for Depreciation" ac- 
count, and overheads charged. Whenever the actual repairs 



LABOR, MATERIAL, AND EXPENSE 



185 



i 



arc made, they will be charged to this reserve account, and 
labor and material credited accordingly. 

The above method of handling repairs, for which pro- 
vision has been made all the way through, cannot be too 
carefully carried out. It must not be forgotten that aside 
from the direct value of costs of operation, their compara- 
tive value is of next importance, and, unless such expenses 
are properly distributed, comparison of cost figures as be- 
tween di liferent periods becomes practically impossible. 
Extraordinary expenses for one month charged to the pro- 
duction for that month would throw the costs out so badly 
as to make them useless for comparative purposes. 

Small Repairs 

There are many small repairs throughout a plant that 
must be made from time to time without delay and without 
waiting for a repair order to be made out. The foremen 
of the plant should be instructed to use their judgment in 
such cases, but under no circumstances should they be al- 
lowed to make such repairs without issuing the proper work- 
men's time tickets and material requisitions, the same as 
for any other work. After the work is done, a formal 
order can be made out and issued, and the number of the 
order placed on these various tickets, so that the time-keep- 
ing and stores departments may properly handle them and 
have due authority for making the necessary distributions. 
This is something that must be very carefully watched, as 
foremen are prone to do much small repair work in time 
that is charged up to the regular product made for sale, 
and if this goes on to any great extent it can readily be seen 
how quickly comparative costs will be thrown out 

Daily Repair Time Ticket 

This ticket (Form 53) has been provided for the record- 






I 



1 86 UNIFIED ACCOUNTING FOR INDUSTRIALS 

ing of time spent on repair orders. It is to be made out 
and handled the same as the daily betterment time ticket, 
and must be turned in daily to the timekeeper after being 
O K'd by the foreman. 

Importance of Accuracy and Promptness 

A careful study and the proper and prompt performance 
of the routine outlined in the foregoing instructions is, of 
course, absolutely necessary to obtain satisfactory results. 
Especially is this true because these matters are related to 
many others and are merely part of a whole. In order to 
have the whole organization properly co-ordinated and the 
entire production of the factory worked up to the proper 
standard, and also to secure the data necessary for main- 
taining this standard, it will be necessary for each depart- 
ment and every individual to carry out their part of the 
work promptly, correctly, and to the last detail. Those in 
charge should realize that if they allow any department to 
become inefficient or to fall behind, the proper working of 
the whole factory is affected, the final results in the con- 
trolling accounts are delayed and unsatisfactory and entirely 
lacking in those vital functions which are the reasons for 
their existence. 

Cost of Production 

While all the foregoing methods have been planned with 
the primary object of building up plant efficiency and 
developing production, they have, at the same time, been 
so laid out as always to obtain cost of production without 
the necessity of separate reports and "red tape" and without 
the installation of a highly specialized cost department. Yet, 
even if the expense of obtaining these costs was ten times 
as high as it usually is, it would be worth the price, for, 
after the work has been standardized, efficiency increased, 



LABOR, MATERIAL, AND EXPENSE 



187 






and costs reduced, it is only by a thoroughly dependable 
system that this general efficiency throughout the factory 
can be maintained. 

All labor costs are collected in connection with, and on 
the same sheet as, the data for pay-roll purposes, as outlined 
in Chapter XI, "Employment and Handling of Labor." The 
material costs are collected and worked out in conjunction 
with the stores-keeping records, as outlined in Chapter IV 
under "Stores-Keeping," and with the record of production 
and betterments described in Chapter XII, "Distributions" ; 
thus making the collection of cost records as nearly auto- 
matic as possible. 

Supplementary Tag 

It should be a rule that lots once started should never 
be split, yet emergencies will arise where an exception be- 
comes necessary in order to keep assembly going. When 
such is the case, a red supplementary tag (Form 56) should 
be used for the "Split-off" lot. This tag shows the piece 
number, production order number, etc., under which work 
is being done, and shows the original lot number to which 
the quantity covered by this tag belongs, also at what 
operation it was taken, the date, by whom, by what depart- 
ment, and the reason for splitting. The balance of the 
operations and routing must be transferred to this tag 
from the original tracing tag (Form 43), thus carrying this 
quantity through to completion as part of the original lot 
and under its number. 

Rejected for Scrap Tag 

The "Rejected for Scrap" tag (Form 57) is to be filled 
out and attached to all pieces and parts that are rejected 
for scrap ; that is, all pieces or parts that cannot be recovered 
by any subsequent treatment or operation. In every such 



if 



l88 UNIFIED ACCOUNTING FOR INDUSTRIALS 

case it must be filled out in full with the data as captioned 
thereon. 

Rejected for Defective Repairs Tag 

Whenever rejected work comes from inspection in such 
shape that it can be recovered from rejection by applying 
certain repairs, the "Rejected for Defective Repairs" tag 
(Form 58) is to be used and the work is to be governed 
exactly by the captions on it, which, in nearly every instance, 
are self-explanatory. Both this tag and the tag "Rejected 
for Scrap" can be made to slip into a holder on tote boxes, 
or to be tied on material, as may be desired. 

Symbolical Control Chart 

A precise but simple method of giving instructions for 
handling papers and transactions in connection with any 
particular part of a business is very desirable. There is no 
clearer way to describe anything than by a chart, whether 
it pertains to general data covering some particular subject 
or subjects; whether it relates to an organization and its 
co-ordination or relationships, or whether it is in connec- 
tion with the handling of papers, transactions, etc. 

Graphic chronological charts which afford a very prac- 
tical method of presenting data, have already been illus- 
trated in Chapter IX (see Forms 38, 39), while in Chap- 
ter XII an organization chart (Form 76) is presented. 
There is still another type of chart which is of equal, if not 
greater, importance than the charts mentioned above, which 
can be called a symbolical chart. This, as illustrated in 
Form 59, shows the manner in which certain items travel 
from one point to another, together with any instructions 
they convey. This chart is presented in connection with a 
control board or planning system (Form 60) for handling 
work in which there is, as here termed, a central order sta- 



li 



LABOR, MATERIAL, AND EXPENSE 



189 



tion, together with one sub-order station. Any additional 
sub-stations to be operated would, of course, be controlled 
from the central order station in precisely the same way. 

This chart (Form 59) offers a simple expression of the 
routine work in connection with planning for order control 
and clears up all of the mystery that so often seems to 
surround this subject. The chart can be applied to the 
handling of all kinds of papers in connection with orders, 
mail, accounting, engineering work, etc. Any concern can 
devise its own symbology for such a chart. The key to 
this need be given to but few persons, thus insuring secrecy 
where necessary. 

All manufacturing orders are for units of some kind, and 
these orders are broken up into production orders, ( 1 ) for 
pieces, and operations on pieces, and (2) for assemblies 
of pieces. The function of a central planning or order 
station should be the distribution of all orders by pieces, 
by operations on pieces, and by the assemblies thereof. 
Where the work is over a wide range of shop location, sub- 
order stations should be established according to geogra- 
phical requirements, from which the work is to be timed 
*Tn" and "Out" to the men, the idea of the sub-station being 
to get a quicker distribution of the work by having the 
timing and control close to the workmen and machines. In 
other words, there is one general planning or order station 
for the whole establishment, but in addition thereto there 
are sub-order stations for the purpose of timing the work 
"In" and "Out" and controlling its progress. These sub- 
order stations will only control processing operations and 
the inspection thereof; while the central order station will 
control directly, or through another sub-order station, all 
assembling, assembly, inspection, and tryout work. 

The chart given in Form 59 represents this in detail, 
together with a symbology which is almost self-explanatory; 



I 

pf 

0i 



fl'l 



11 ! 



190 UNIFIED ACCOUNTING FOR INDUSTRIALS 

in practice, the explanation of these symbols would not 
appear on the chart if secrecy was an object. 

Briefly described, the central order station, shown near 
the bottom of the chart, receives from the production en- 
gineering department, as per "A," three blue-prints; one 
set of tool key cards; one set of tool set-up key cards; one 
set of fixture key cards ; one set of unit key cards ; one set 
of part key cards; one set of piece key cards; one set of 
operation key cards, and two copies of the production order. 
One copy of the production order, "B," is sent to the stock 
room as authority for the stores keeper to supply material, 
and is held there permanently in the file, with which in due 
time are placed duplicate requisitions. One copy of the 
production order, "C," is filed in the central order station 
and is held there as "work on order" until completed, when 
it, together with the signed tracing tag and blue-print No. 2 
is returned to the engineering department. Blue-print No. 
1, usually having been cut up, is destroyed and thrown into 
the waste basket, while the key cards as a general thing 
supply data for the routing and issuing of instructions from 
the central order station, and are consequently on permanent 
file at this point, as indicated by "A-1." 

At the routing desk in the central order station, the 
order is broken up into pieces and operations on pieces, and 
from there routed in envelope "E" to the various sub-sta- 
tions where the work is to be done, each envelope containing 
one blue-print, "E-1"; one instruction card (which is the 
same as a production ticket) for each operation to be done 
on the piece, "E-2" ; one duplicate instruction card, "E-3" ; 
a requisition to the general stores for material, "E-4"; 
a duplicate requisition, "E-5," and a tracing tag to be 
attached to the material, "E-6." This envelope is received 
at the control board of the sub-order station and from here 
the papers are distributed. 



LABOR, MATERIAL, AND EXPENSE 



191 



The original requisition for material, together with the 
tracing tag is sent to the stock room, as per "F," while the 
duplicate requisition is sent to the stock clerk of the sub- 
order station, 'T-l"; the stores-keeper selects the material 
and attaches the tracing tag to it, and forwards this to the 
stock clerk of the sub-order station, "F-2." As soon as 
this is checked up by the stock clerk, and signed by him, the 
original requisition together with the duplicate is returned 
to the stock room, 'T-3," and from thence the original 
requisition is sent to the accounting department, "F-4," 
and the duplicate filed in the stock room, while the rough 
stock is sent directly to the workman as per "F~5." 

In the meantime, the workman's instruction card (pro- 
duction ticket), together with the blue-print, are sent to the 
workman who is to perform the operation, through the con- 
trol board and time clock as per "G," and if the work takes 
longer than one day, a daily time ticket is made out and 
sent to the accounting department as per "G-1.'* As soon 
as the workman finishes a certain piece or quantity of pieces, 
the work is forwarded directly to the inspector as per '*F-6," 
and a new ticket and new instruction card, together with 
a blue-print are forwarded to the inspector as per "G-2." 
When the work is completed here, the envelope containing 
the blue-print and instruction card is forwarded to the rout- 
ing desk of the central order station, as per "E-7," where 
the blue-print goes to the waste basket and blue-print No. 2 
is drawn out and forwarded with an instruction card as 
per "H" to the control board, through the time clock to 
assembly, as per "H-l"; and thence to inspection, as per 
"I," and thence to a try-out as per "J." After the work is 
completed in "J," it is forwarded as per ''K" to the central 
stores, checked, signed for and the tracing tag sent back, as 
per "I," to the central order station. From here the copy 
of the production order, together with the second blue- 



f 



192 UNIFIED ACCOUNTING FOR INDUSTRIALS 

print and tracing tag, which came back from stores, are 
put in an envelope, "E-8," and returned to the engineering 
department, showing that the job has been completed for 
each individual piece or for an assembly of pieces. 

In the routing of material, as can be seen by the broken 
line, it goes directly from the workman to the inspector, 
then to the assembly, then to the inspector, and then to the 
try-out, without physically being taken to the sub-order 
station or central order station, as this is in accordance with 
the routing of the tracing tag. 

In connection with the central order station, at point 
"N" a line is shown whereby, if work on any particular 
job lasts for more than one day the daily time tickets are 
sent directly to the accounting department in the same way 
as they were at "G-1" in the sub-order station. 

When the envelope "E" is sent to a sub-order station, 
it contains the instruction cards, one for each operation to 
be done on the piece called for; therefore, if there were 
ten operations it might go to ten different men before it 
was completed, being registered in and out at the sub-order 
station for each transfer; these registrations being made 
from the instruction card which is returned each time an 
operation is completed. On the outside of the envelope 
are printed a set of figures from 1 to 20, or more, as may 
be necessary, which are simply used to check up the opera- 
tions done. That is, each time an instruction card comes 
back from the workmen, the operation number it represents, 
or the letter covering the operation it represents, is checked 
off on the outside of the envelope, so that at a glance the 
order clerk can tell how far along any particular operation 
has progressed. As soon as this check is made on the out- 
side of the envelope, the instruction card is forwarded to 
the accounting department, as shown at "N-1" and "G-3." 

There are, of course, any number of variations that 



LABOR. MATERIAL, AND EXPENSE 



193 



H 



could be made in the foregoing chart; as, for instance, it 
might be better, even necessary, in some plants to send the 
tracing tags and requisition for material directly to the 
stock room instead of the sub-order station stock clerk; in 
which case the lines and the symbols covering these would 
be drawn accordingly. Or, again, the duplicate requisition 
for material might be destroyed, or might be sent to the 
accounting department, according to other systems that 
may be in use. In other words, the chart as shown is 
not a fixed and fast diagram for doing a certain thing, but 
rather an illustration of how systems and methods and 
routine work can be expressed in the shape of a chart, which 
in itself constitutes the instructions to the clerks and others 
employed on the various operations. 

Planning Board 

This board (Form 60) is made up of vertical units, so 
that it may be contracted and expanded from a minimum 
of 24 men to a maximum of 120 men on one set of sup- 
ports. Further, the entire board is not only portable, but 
also adjustable, as it may be arranged at any angle desired 
from a vertical position to a horizontal position. Each unit 
has pigeonholes for 12 men. At the bottom of the unit are 
12 spaces for men's names and numbers, and, in connection 
with each space, a hook on which to hang a brass check, 
which represents any machine the workman may be using, 
as illustrated by C and D in the small drawing showing a 
portion of a single unit. Each pigeonhole is numbered, the 
number of a pigeonhole being given for each man, as shown 
by E. 

In order to know what machines are or are not being 
used, a machine board — entirely separate and distinct from 
the planning board— -is used. This board is provided with 
hooks on which are placed brass checks for each and every 



194 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



machine controlled by any one station or planning board. 
These checks should give not only the numbers of the 
machines, but also, by a symbol of some kind, its type or 
character. 

Whenever a workman is given work and a machine is 
assigned to him for doing the work, the brass tag repre- 
senting that machine is taken from the machine board and 
is placed on the pin under his name on the planning board, 
there to remain until the job is completed. In this way all 
brass tags hanging on the machine board will represent 
machines that are available for work, and the empty spaces 
will indicate machines which are in use. By proceeding in 
this way, the machine and the man are always brought 
together for each and every operation done, without hav- 
ing to post on the machine board the jobs that are on each 
machine, as is the case with most planning systems. 

Round tags can be used for machines. If it is desired 
to post on the machine board the man's number on his 
being assigned a machine, a square tag should be used. In 
this way information regarding the distribution of workmen 
and machines will always be available by looking at the 
control board and at the machine board, and without in 
any way having to make a record in writing of just how 
work is distributed. Also, as many men do not work on 
machines, but are on bench work, this fact is shown by the 
absence of a machine tag on the planning board. In this 
way is ^.ecured a complete control of all men employed. 

Whenever an order is made up for a piece or component, 
a large envelope, made to fit the pigeonhole in the control 
board, should be used in which to put blue-prints, material 
requisitions, tracing tag, and workman's instruction cards 
for all the operations required on the one piece. As these 
are needed they are distributed by sequence of operations 
to the workman in another envelope of the same size, and 



LAIOR, MATERIAL, AND EXPENSE 



I9S 



a white slip containing a duplicate of the instructions given 
the workmen is pasted to the top of the original envelope 
so as to be visible in the workman's pigeonhole ; the control 
board thus showing at a glance the entire distribution of 
work that has been given out. The envelope can be used 
several times by pasting one white slip over another. Con- 
sequently, the stock of the envelope should be fairly heavy 
and strong, without flap, and made permanently open at 
the end. 

In case the work to be done is of such a nature that 
blue-prints or other bulky papers arc not used, and the 
pigeonholes are simply wanted for instruction cards, ma- 
terial requisitions, tracing tags, etc., for work ahead, the 
pigeonholes would have to be proportioned accordingly, and 
in this case the white slip would simply be held on top of 
the pigeonhole by a small steel clip; any one of several 
kinds which can be purchased answering this purpose. 
These clips might also be used in connection with the 
envelope, if for any reason they should be preferred. 

What has been said in regard to the order control chart 
also holds true here, as there are many ways of designing 
a planning board. Form 60, as designed by the writer, has 
been presented here because it seems to combine to an un- 
usual degree certain points of adaptability, simplicity, and 
labor economy in its use. 



CHAPTER XI 
EMPLOYMENT AND HANDLING OF LABOR 

In which the handling of labor is considered 
from the time of starting to stopping, to- 
gether with an approved method for paying 
labor and distributing its time. 






CHAPTER XI 

EMPLOYMENT AND HANDLING OF LABOR 



Organization of Employment Department 

It is the purpose of the present chapter to discuss the 
subject of labor somewhat broadly, but at the same time to 
give more particular attention to its relation to the account- 
ing and statistical work. 

Wherever possible, there should be an employment de- 
partment or bureau which is to provide labor for all 
branches and departments of the factory. Furthermore, 
the responsibility of this department should be full and 
complete, and it should be a general rule that no one may 
be employed in the factory for any purpose whatsoever 
except through the employment department. 

The employment manager should keep on file all applica- 
tions for employment, all references relative to employees, 
and maintain a directory of these employees. In many 
cases he will also find it necessary to compile and have avail- 
able information in relation to rooms, board, dwelling 

houses, etc. 

In order to handle labor systematically from its first 
application to its final dismissal, a card record will be found 
convenient. A set of cards designed for the use of the 
employment department is presented in Forms 61-75. A 
detailed discussion of these cards follows. 

Application for Employment Card 

On this card (Form 61), designed to cover all general 
labor in the factory, may be recorded the various necessary 

199 



200 UNIFIED ACCOUNTING FOR INDUSTRIALS 

data in regard to the applicant. The cards should be filed 
by trade or occupation, that is, under "Machinists," "Black- 
smiths," "Clerks," etc., so that, whenever a requisition for 
additional help is made, the applications of those capable of 
doing the required work may be readily located. When 
an employee is skilled in more than one kind of work, he 
should be indexed under all the occupations in which he 
claims to be competent, and the file number will be marked 
on the card, that is, the file number for reference to any 
letters of recommendation or correspondence that may be 
received in connection with an employee. 

Letter Application for Employment 

In order to provide for the higher class of employees, 
as for instance, high-grade office or engineering help, con- 
cerning which a great deal more information is required 
than for ordinary labor, a "Letter Application for Employ- 
ment" (Form 62) may be employed. This letter application 
is self-explanatory in its purpose and use. It is usually 
double- folded to a 4 X 6 inch size, and filed as it is received, 
under occupation indexing in an ordinary card index 
drawer, the same as the application card. 

As in the case of the employment card, the file number 
of any other correspondence or material relating to the 
particular application will be noted on the letter applica- 
tion. 

Reference Inquiry Letter 

This is a form of letter (Form 63) used in all ordinary 
cases for making inquiry of those given as references by 
applicants for employment. It is self-explanatory. Both 
this and the preceding letter form are made to double-fold 
to a 4 X 6 size so that, if desirable, they can be folded and 
filed in a card index drawer of this size. 



EMPLOYMENT AND HANDLING OF LABOR 201 



Requisition for Help Card 

This card (Form 64) is for the use of all division heads 
and foremen in making applications for labor. The face 
of the card is filled out in accordance with its headings by 
the party making the requisition. In each instance the card 
is made out in duplicate, the original being sent to the 
employment bureau, and the duplicate to the factory super- 
intendent. On the back of the original requisition for help, 
in the columns provided for the purpose, the employment 
department records the names of men sent for, the date, 
and any comment. After men have been supplied, these 
cards may be temporarily filed in the employment depart- 
ment, under the names of the departments from which they 
come, as they show the authority for having hired the help 
so requisitioned. 

It should be understood, as before stated, that all labor 
should be selected and hired by the employment department, 
and that, with rare exceptions, all general labor in the 
factory is to be hired and initial rate adjustments made 
without in any way being interviewed by foremen or divi- 
sion heads. Exceptions to this rule may be made in the 
case of such labor as is employed by letter application for 
employment. 

Employee's Rate Card 

As soon as the labor called for by a requisition is ob- 
tained, the employment department should make out for 
each employee an employee's rate card (Form 65). The 
employment department will also furnish the workman with 
an introduction card (Form 66) for presentation to the 
foreman to whom he is to report for work. The foreman 
will take up this introduction card, sign and return it 
through his division head to the employment department. 

The employee's rate card provides for a running record 



202 UNIFIED ACCOUNTING FOR INDUSTRIALS 




of any and all changes affecting an employee as regards 
wages, department, and clock number. It is sent to the 
factory superintendent or other division head for approval 
of rate and then to the accounting department for filing. 
In every instance a day rate must be set for each em- 
ployee, whether he works at piece-work or not. The reason 
for this is that— as is generally conceded— piece-workers 
should earn from 20% to 30% more on piece-work than 
they would on day-work; otherwise, there i<= no induce- 
ment for piece-workers to speed up. Ultimately a running 
chart on piece-work earnings, as compared to day-work 
rates, should develop information of this character. If, 
however, piece rates are so set that the piece-workers are 
running from 30% to 50% more than their day rates, piece- 
work rates have been wrongly set and the quantity of work 
that could be turned out has been misjudged. One un- 
fortunate result of such a mistake is that piece-workers are 
likely to hold back so that excessive earnings shall not call 
attention to the error in piece rates, and the maximum out- 
put from equipment is not obtained. 

Reductions of piece rates, when once these are estab- 
lished, are intensely discouraging to employees, tend to 
make them hold back, and have done more to bring the 
premium system into disrepute among them than any other 
thing. Because of this, piece rates should never be reduced 
after being once set, unless operation changes make it 
necessary. Day rates, however, may be changed to take 
effect twenty-fours hours after the employee is notified of 
the change. 

To simplify the handling of the pay-roll, all employees, 
including piece-workers, should be paid each pay day on 
a day rate basis, and be paid on the first of each month the 
difference between the day rate and what has been earned 
on a premium or piece-work basis. 



a 



EMPLOYMENT AND HANDLING OF LABOR 203 

The employee's rate card is to be posted from the follow- 
ing cards in the order given: 

1. "Change in Rate Card'* (Form 67), which is used by 
division heads to notify the accounting department of a 
change in rate, the reason for the same, and the party 
authorizing it. These cards should be kept on file in alpha- 
betical order in the accounting department, so that they 
may be referred to at any time for authority for any change 
and the amount in change of rate. 

2. "Change of Department Card'* (Form 68), which 
is used by division heads to notify the accounting depart- 
ment of transfers. This card, however, need not be kept 
after making entry on employee's rate card, as no purpose 
is served by keeping it on file. 

3. "Report of Absentees' Card" (Form 69), which is 
used by the timekeeping department for keeping the foremen, 
superintendent, and others advised as to absentees. This 
information on these cards or slips is posted on the back 
of the rate cards where a record of each individual em- 
ployee's absence is kept. The timekeeping department 
should be held strictly responsible for prompt notice of 
absentees to all interested persons both in the factory and 

in the oflBce. 

It is important that a rule should be made and strictly 
enforced, that if it is necessary for an employee to be absent, 
such employee must send notice to the employment office by 
telephone or otherwise, of his inability to report for work, 
and that if an employee misses five musters without sending 
such notice, he will be dropped from the pay-roll and not 
reinstated except by re-employment in the regular way. 
There are two reasons for this rule: if such notice is not 
given, a great deal of trouble can be caused by delayed 
work which the employee should have done, and, again, it 
causes trouble in making up the pay-roll, etc. 



;204 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



Quitting Card 

The information contained on both sides of this card 
(Form 70), while of great importance to the com- 
pany as a whole, is of particular importance to the employ- 
ment department, as enabling it to judge of the stability 
of the labor employed and to recommend any changes neces- 
sary to correct evils in the handling of labor. It is there- 
fore of the utmost importance that the information of the 
quitting card should be full and readily available. Not 
only is the employee's own reason for leaving wanted, but 
frequently, in addition, the opinion of some fellow em- 
ployee as to why the employee left. An inspector's or fore- 
man's opinion as to the reason for leaving is also provided 
for on the back of the card. 

When a man is discharged, or quits for any reason 
whatsoever, one of these cards should be made out imme- 
diately by the head of the department under which he is 
employed, and all the information entered in detail as 
called for on the card. It is then to be sent to the office 
of the employment manager, where the man who is quitting 
will go for any adjustment or action necessary in his case. 
Instead of being allowed to leave, a desirable employee 
should be transferred to some other department or held in 
some other way, if this is possible. 

As one of the most important questions in connection 
with labor is its stability, an employee should never be 
allowed to leave a company without full data as to the 
reasons why he left. Oftentimes, the company may be at 
fault, through its division head or foreman rather than 
the man w^ho leaves; consequently, the causes that lead to 
an employee's leaving are always a question for serious con- 
sideration. Unfortunately, it is necessary to allow fore- 
men or division heads to discharge men from their depart- 
ments; otherwise they could not maintain discipline. The 



EMPLOYMENT AND HANDLING OF LABOR 205 

employment bureau must act as a clearing house for such 
discharges. Foremen, knowing that under this method, in 
case of a dismissal, they as well as the man discharged are 
subject to investigation, are much more careful and just 
in their attitude toward labor. 

Records invariably show that labor is less stable under 
some foremen than it is under others. Records will also 
show that often men are put on work they are not fitted 
to do ; whereas, if they were shifted to some other kind of 
work, they would render satisfactory service. Therefore, 
all the information called for on the quitting card should 
be supplied, and before an employee can draw his money 
and actually be let out, the information on this card should 
be analyzed by the employment manager and the man 
handled according to his findings. It may be possible to 
put the man to work at some other point. It is always 
understood, of course, that before the man is paid off, 
information must have been received that all tool checks 
and other charges against him have been turned in and taken 
care of. 

Employees Dismissed and Resigned 

So much importance attaches to the record of employees 
quitting, that it should be utilized to make out the "Monthly 
Record of Employees Dismissed and Resigned" (Form 71). 
These records give for each month, with reasons, the num- 
ber of employees leaving. If employees are leaving because 
they are dissatisfied, it is certainly a serious thing for the 
management, and statistics are needed giving the causes of 
dissatisfaction. On the other hand, if a large percentage 
of employees leaving are undesirable employees, there is 
something wrong in the method of the employment depart- 
ment in the hiring of labor. Again, if employees leave for 
other positions, it is quite evident that the other concerns 



I 



206 UNIFIED ACCOUNTING FOR INDUSTRIALS 

are offering better inducements. In other words, this 
record gives the data for analyzing all of the changes which 
take place in the personnel of labor. 

Pay Period 

If possible, a four-times-a-month pay system should be 
installed instead of a once-a-week system. The principal 
reason for this is the saving of clerical labor that will be 
effected in handling a pay-roll at the end of the month in 
order to get a monthly statement of profit and loss. In 
other words, when employees are paid once a week, it nearly 
always brings the end of the month in the middle of a week, 
which necessitates carrying an extra account in the ledger 
and it also involves the figuring up of one week's work two 
different times to get the distribution, thereby causing a 
great amount of extra clerical labor. This applies both to 
non-productive labor, which must be prorated over pro- 
duction orders, and to the productive labor itself. 

Under the four-times-a-month pay system proposed, 
the pay days may be set somewhat as follows: 

On the 4th, up to and including the 31st 

12th, " " " " " 8th 

20th, " " " " " 16th 

28th, " *' " " " 24th 

This arrangement allows four days after the close of each 
pay period for making up and checking the pay-roll, 
which is usually a sufficient time to do the work properly 
and accurately. 

All employees in a factory, except foremen and depart- 
ment heads, should be put on an hourly basis, and paid for 
the actual number of hours they work. All office employees, 
foremen, and department heads should be paid on a monthly 
basis, and paid in four equal payments each month. This 



it 
it 
ti 



ti 



tf 



it 



EMPLOYMENT AND HANDLING OF LABOR 



QQJ 



very much simplifies the making up of a pay-roll and all 
subsequent distributions. 

Time Card 

The time or clock card (Form 72) should be used for 
keeping the daily time of all employees. They are required 
to ring "In" in the morning and "Out" at noon; "In" at 
noon and "Out" at night ; "In" for extra time and "Out" 
for extra time. The record of all this is provided for on 
the card, each card showing also the pay period and the 
time it covers. 

Each card should bear the name of the employee, and 
all payments made by the company should be controlled by 
the time registered thereon, except in the case of piece- 
work or premium work. 

A timekeeper should always be at the clocks when 
employees are ringing "In" and "Out," and it should be 
the timekeeper's duty to see that the clocks, card racks, etc., 
are kept in order, and that the clocks are kept on time. 
As soon as all employees are in in the morning, the head 
timekeeper should have all time on clock cards sent to his 
office and there enter them on a time sheet (Form 73) for 
the time registered by the clock on the previous day. 

At the end of each pay period these time cards are 
used for making up the pay-roll. The total amount of 
regular, overtime, piece-work, and premium work, shown 
on the time sheets, is entered in the spaces provided for the 
same, and the cards are then handed to the paymaster or 
treasurer, who will have the pay-roll made up, deducting 
any advances and entering these advances on the card, so 
as to show the kind of pay which the employees receive, as 
well as the total. Each time card should bear the number 
of the time sheet from which the amount paid is taken. 
(See also Form 73.) 



2o8 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Pay Check 

It will be noticed that a detachable pay check (Form 72) 
is provided with the time card. When new cards are put 
in the racks at the beginning of a pay period, the date the 
pay period ends and the employee's number are inserted 
upon each pay check, the same as on the main part of the 
time card itself. When an employee takes the card out of 
the rack for the first time, he tears off his pay check and 
puts it in his pocket, thus having a means of identifying 
himself at any time he is called upon to do so ; and it should 
be a rule that any man in a shop who cannot produce his 
pay check should be immediately challenged as to whether 
or not he is an employee of the company. 

On pay day each employee should have his pay check 
ready, signed with his name and address, and when he re- 
ceives his pay must pass it in as a receipt. If a premium 
system of payment is adopted, the premium earnings may 
be put in a red envelope, in which case the employee will 
sign once for his regular envelope and again for the 
premium. This red envelope is quite a feature as it calls 
the attention of the other workmen to the fact that an 
employee is earning a premium, and usually creates an 
interest in premium work and an anxiety to have their 
own work put on a premium basis. 

After payment has been made, this pay check is pasted 
on the back of the time card where the word "Instructions" 
appears, with the signed side up and in front, and the entire 
lot of time cards with these checks pasted to them is 
fastened together and filed away for future reference in 
auditing. 

If an employee should lose one of these pay checks, it 
will be almost impossible for anyone finding it to draw his 
pay if it does not show the owner's signature and is not 
identified by his foreman. Pay checks presented outside of 



I 



EMPLOYMENT AND HANDLING OF LABOR 209 

pay day should be challenged for this information. Further, 
a comparison of signatures with previous checks would 
immediately indicate a forgery, if one was attempted. Em- 
ployees should not sign their pay checks until the morning 
of pay day, thus making it impossible, if one is lost, for a 
chance finder to get it cashed. 

Time Sheet (First Form) 

The purpose of keeping a time sheet such as that shown 
in Form 73 is much more than the mere collection of time 
for pay-roll purposes. Primarily it does this, but, while 
keeping it for pay-roll purposes, the information gathered 
is also available for other purposes far more important. 
First, it affords a check on the factory against the "In" 
and "Out" time clocks; and second, a complete record of 
each employee's time for each pay period is secured, show- 
ing how this time has been disposed of; third, a record is 
made that will act as a labor distribution sheet, and from it 
can be compiled all statistics and costs relative to the amount 
and the time expended on the different kinds of labor, 
namely, day work, extra time, piece or premium work, non- 
productive time, and waiting time ; and finally, it provides a 
completely self -balancing and self-proving record, which 
will immediately show any errors in turning in or in post- 
ing time tickets, so that such errors can be checked up and 
rectified before matters become "cold" and before it be- 
comes impossible to locate discrepancies. As the figures 
computed for pay-roll purposes are the same figures used 
for distribution data, the time sheet proves itself, and at 
the end of each month the total amount expended for labor 
must balance out exactly with the total labor distribu- 
tion. 

The time sheets illustrated in Forms IZ, 74 are there- 
fore capable of being used for: 



1 



2IO UNIFIED ACCOUNTING FOR INDUSTRIALS 

1. Checking workmen's daily time tickets and slips 

(see Chapter X) against the clock time. 

2. Providing a distribution of each workman's time 

according to the department number in which he 
is working, and the activity or kind of labor at 
which he is employed in that department. 

3. Furnishing a complete system of costing of labor on 

all production at the same time that the time for 
pay-roll is extended. 

Two of these sheets, which are printed on both sides, 
are to be used for each employee each month. One side 
of the first sheet provides for keeping the time from the 
1st to the 8th of the month, inclusive, and the reverse side, 
from the 17th to the 24th inclusive, while the other sheet 
provides for keeping the time from the 9th to the 16th 
inclusive on one side, and from the 25th to the 31st inclusive 
on the other. This arrangement enables the timekeeper to 
enter the time from the time cards and workmen's daily 
time tickets on the current time sheet, and leaves the sheet 
for the previous pay-roll available for figuring extensions 
and computing the pay-roll separately. At the same time, 
it gives on each sheet the total pay for the period, and on 
the last sheet of the month, monthly grand totals for each 
employee, thus giving the fullest data which can possibly 
be required without going to the expense of re-compiling 
figures for statistical purposes, etc. 

As stated under the description of the clock or time card 
(page 207), each morning the time on the time card is to 
be entered at the top of the time sheet, and against this 
time will be checked workmen's time tickets coming in 
from the factory each day. Provision has been made on 
this time sheet for entering the hours and minutes only from 
the workmen's daily time tickets. This requires an ex- 
tension of the amount in money but once for the entire pay 



EMPLOYMENT AND HANDLING OF LABOR 21I 

period, thus saving a great deal of time, computation, and 
extension work. 

When the workmen's daily time tickets (Forms 44-55) 
come in each morning for the previous day's work, the time- 
keeper first sorts them by the employees' numbers and posts 
to the time sheet. For all tickets showing operations on any 
production, betterment, or repair orders, the "Order Let- 
ter," ''Order Number," and "Operation Number" should be 
entered in the first three left-hand columns of the sheet, and 
the space in which they are entered between the heavy cross- 
rulings is left for the same order for the entire pay period, 
i.e., the information on the particular order for the pay 
period is entered entirely across the sheet. 

To illustrate, if a workman's first time for the period 
comes in showing part of his time on production order No. 
500, operation "A," then the order letter "C" ("C" for pro- 
duction, "E" for betterment, and "F" for repairs) will be 
entered on the first line of the sheet in the first column 
headed "Order Letter"; under "Order Number" will be 
entered "500," and under "Operation Number," "A." Then 
will be extended under the proper date the number of hours 
and minutes shown by the time ticket, which will be en- 
tered on the line showing the kind of work, i.e., day work, 
overtime, piece-work, and premium. If the same order is 
worked on again in the period, it is entered on the same 
horizontal lines but under the proper date as the first time. 
If the remainder of the first day is spent on betterment order 
No. 100, in the next space between the heavy horizontal 
lines will be entered E Order No. 100, and the hours and 
minutes entered in the column under the same day and on 
the day-work line. 

As the workman goes on working from one production 
order to another, the order number will be entered in the 
next vacant space between the heavy cross lines, and all of 



212 UNIFIED ACCOUNTING FOR INDUSTRIALS 

the time for the pay period spent on such order number 
will be entered between these same heavy lines, so that at 
the end of the pay period, by adding across the page, the 
total time spent on each production order is obtained, to- 
gether with the total cost of each operation on each produc- 
tion order. Space has been provided for posting the time 
on twenty-one different order numbers in each pay period. 
Usually there will be a less number than this, but, in case 
there should be more, a separate sheet can be kept for the 
additional orders and filed in a binder directly behind the 
first sheet. 

Under each date in the "Ticket Number" column of the 
time sheet should be entered whatever additional number 
there is to the time ticket other than the production order 
and operation numbers; that is, all tickets on production 
orders are to be numbered with a combination of the pro- 
duction order number, operation number, and lot number. 
Therefore, as the production order number and operation 
number are given in the left-hand column on this sheet, the 
only remaining figure to be put in under "Ticket Number" 
will be the lot number. 

When a workman turns in a time ticket for non-produc- 
tive labor (Form 55), the ticket number and the hours and 
minutes shown on the time ticket should be entered on the 
lines provided for that purpose near the bottom of the time 
sheet. This also applies to waiting time, provision having 
been made for two waiting time tickets (Form 51) in any 
one day. 

It will be seen that, adding down the entire column 
under each day, the footing obtained is the workman's total 
number of hours and minutes for that day, and this total 
must agree with the total clock time. If any discrepancy 
occurs in this respect, the matter must be taken up by the 
timekeeper with the foreman or superintendent, and he 



EMPLOYMENT AND HANDLING OF LABOR 213 

must see that tickets are turned in for the entire time shown 
by the clock. 

The hours and minutes on piece-work must be entered 
on the time sheet daily, just as for day-work. When the 
first ticket for certain operations on piece-work comes in, 
the timekeeper will enter, in the "Order Number" column 
directly underneath the number of the order, the piece rate 
in red ink, and when he posts the hours and minutes he 
should also post directly below this in red ink the number 
of pieces processed at this operation. In this manner, at 
the end of the pay period, the total number of pieces pro- 
cessed can be extended in red ink in the same column with 
"Total Hours," and the piece-work earnings can then be 
entered on the proper line in the column "Amount Day- 
Work." 

Premium earnings should be handled in the same man- 
ner as piece-work, entering them in red ink directly above 
the premium hours. The "Bonus" column will be used, of 
course, only in case of premium work, when the premium 
bonus will be shown thereon. The "Total Pay" will be 
entered in the last column. 

At the end of a pay period this sheet is transferred from 
the timekeeper's active binder, the other sheet being used 
meanwhile, as it is then ready for figuring extensions. This 
should be done on a calculating machine. When the sheets 
are extended and the footings obtained, the amount of time 
together with the money it represents, as shown on the 
time sheets, should be carried to the laborer's time on clock 
card (Form 72) for that pay period. 

After extensions have been made for pay-roll purposes, 
a recapitulation of the total hours and costs of each produc- 
tion, betterment, and repair order, and of all non-productive 
work and waiting time, are drawn off, and at the end of 
the month the totals are turned over for distribution work. 



214 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



It will be seen that these time sheets afford a complete 
and clear record of each employee individually, and of all 
employees collectively, as well as giving complete cost data 
for all labor employed on each order going through the 
factory. 

It should be noted, that at the top of the sheet, not only 
are the employee's name and number given, but also the 
department number and the activity, this activity meaning 
the classification of labor, such as day-worker, piece-worker, 
premium worker, clerk, non-productive day- worker, etc., 
the timekeeper being given a classification number for each 
of these by the distribution department. 

In posting the daily time tickets, each should be checked 
with the department number as shown at the top of the 
employee's time sheet, and, if the time ticket shows that he 
is working in another department, such time must be entered 
in a space between the heavy cross-rulings, in the first 
column of which will be entered "Charged to Department 

" Thus, at the end of the month the total of 

such time spent in other departments can be charged to the 
proper department, and not be shown in such employee's 
regular department, as would otherwise be the case. 

Distribution of Labor Costs 

When the timekeeper receives notice of the completion 
of any production, betterment, or repair order during the 
month, he will immediately obtain from his time sheets the 
recapitulation of the labor cost of such order and turn it 
over to the distribution department ; and at the end of each 
month the totals of all unreported production orders, non- 
productive labor, waiting time, and every other classification 
of time, will be turned over to the distribution department, 
thereby furnishing it with the complete distribution of the 
entire pay-roll for the month. 



EMPLOYMENT AND HANDLING OF LABOR 215 

In turning over labor costs on orders completed during 
the month, notation should be made on the time sheet, so 
that the costs of these same orders will not be included in 
this distribution report at the end of the month. 

In addition to this, there will be drawn off at the end 
of each month the total of labor charges to each department, 
and to the classification of activity of such labor in each 
department, as per the "Labor, Material, and Expense Dis- 
tribution Sheet" (Form 11) ; that is, the total labor for 
each department will be given according to the distribution 
numbers, as set forth in Chapter XII, "Distributions." 

Time Sheet (Second Form) 

A second method of timekeeping is hereby offered for 
consideration, which is somewhat simpler than the one 
previously described, as, in so far as the time sheet is con- 
cerned, it confines itself to pay-roll purposes only. The time 
sheet illustrated (Form 74) provides for four pay periods 
per month, as in the previous case, and also provides for the 
registration of the time or clock cards (Form 72) and of 
the internal tickets, whether for day-work, overtime, or 
simply piece-work. In this system the clock cards are 
gathered every morning, and the hours and minutes only 
are posted to the proper column. Then, if an internal ticket 
is provided for each and every employee, it is posted to the 
column "Regular," "Overtime," or "Piece-Work," as the 
case may be, space being allowed for three different piece- 
work tickets each day. 

Extensions on this sheet for day-work are made but 
once a pay period, and can be made for piece-work once 
a pay period or once a month, according to the policy 
established for handling piece-work. That is, in some 
factories it is found desirable to pay men on a day rate 
basis for the entire month and then once a month pay them 



'I 



1 > 



2l6 UNIFIED ACCOUNTING FOR INDUSTRIALS 

any additional amount they may have earned on piece-work. 
In other words, the difference between the "Total Piece- 
Work" column and the "Total Day Wages" column, as 
shown at the end of the month on this time sheet, gives in 
such cases the additional amount earned by piece-work from 
pay period to pay period during the entire month. 

It should be borne in mind that this time sheet serves 
no other purpose than pay-roll requirements and that all 
distributions by departments and by production, betterment, 
and repair orders must be made entirely independent of it. 

For distribution, when this sheet is used, reference is 
made to the departmental distribution sheet shown in Form 
77, in which the account numbers run across the top of 
the page and the department numbers vertically on the left- 
hand side. A very simple method of distribution of time 
tickets and clock cards can be made by sorting all tickets to 
a set of pigeonholes made to correspond to each one of 
these departmental distribution numbers; that is to say, 
each department number, plus an account number, should 
constitute a pigeonhole. During the month, all time tickets 
and requisitions are extended and placed in these pigeon- 
holes according to the department from which they come. 
At the end of the month, by simply using an adding machine 
and entering the totals on the distribution sheet, a depart- 
mental distribution is obtained. After this, all tickets and 
requisitions, covered by a production, betterment, or repair 
order number, are sorted by these numbers, and the adding 
machine is again brought into use and the total of each 
order number is placed on the record of production, better- 
ment, and repair order sheets (Form 78). This affords a 
simple but complete method of obtaining the pay-roll, the 
departmental distribution, and the production, betterment, 
and repair order distribution. 

This method can be simplified still further, if necessary. 




EMPLOYMENT AND HANDLING OF LABOR 217 

by reducing the time sheet illustrated in Form 74 to a record 
of piece-work earnings only, paying off on the basis of the 
clock cards each week at the day rate, and at the end of 
the month paying the difference between day earnings and 
piece-work earnings. 

In order to explain better this last method of handling 
the pay-roll, a time or clock card based on a weekly pay 
period and somewhat different in its construction from the 
one previously illustrated, is shown in Form 75 and dis- 
cussed under the next heading. 

Time Card (Second Form) 

Every employee of the company, in the office as well as 
in the factory, whether a division head, foreman, or other- 
wise, should, without exception, use a clock card (Form 75) 
for keeping his daily time. Time clocks should be installed 
throughout the works, each one or more at the same point 
being called a "Timekeeping Station" ; and, in assigning a 
clock card to an employee, the station number should be 
indicated on the time card, as should also the number of 
the department in which he works. 

It will be noted that these clock cards cover a period of 
seven days, on the assumption that all payments are made 
on a weekly basis, and the total time of each day is footed 
up at the bottom of the card. 

With all work throughout the factory that is to be 
covered by a production, betterment, or repair order, a 
time or cost ticket bearing the number of the order will be 
used. On the clock card will be noted a checking line "Ck" 
just below the "Total" line at the bottom of the card. In 
this the time for any particular date as shown on the cost 
cards in the factory, can be entered as a check on the total 
time. For instance, if a man's clock time shows up for 
eight hours, and his internal time on the cost card shows 



2l8 UNIFIED ACCOUNTING FOR INDUSTRIALS 

up for only seven and a half hours, there is a difference of 
thirty minutes to be accounted for, which may be charged up 
to waiting time if necessary. If this is done, at the end of 
any pay period or at the end of a month, if found desirable, 
statistics can be made as to this waiting time. Or again, as 
is done in some factories, if internal time tickets are issued 
each day for each and every employee, this bottom space 
on the clock card can be used to check up the man's time, 
as between "In" and "Out" time, and internal time. 

When the time for the week has been duly entered on 
the clock card, the activity of the employee, whether he is 
a foreman, laborer, or clerk, as shown on the distribution 
sheet, is indicated on the clock card, and the entire distribu- 
tion of labor can then be made from these clock cards so 
far as departmental distributions are concerned. In other 
words, much of the information that is compiled on the time 
sheet in the method previously discussed, is here tabulated 
on the clock card, this card having vertical columns for 
registering time, instead of horizontal columns. 

At the end of each pay period, the clock cards are to 
be used in making up the pay-roll. The total amount of 
regular, overtime, and piece-work earnings having been 
entered in the spaces provided, the cards are sent to the 
accounting department for the making up of the pay-roll. 
The cashier will deduct any advances by entering them on 
these cards so as to show the net amount of pay the employee 
is to receive, as well as the total. 

Regular time and extra time on day-work will be posted 
direct from the clock card itself, while piece-work earnings 
will always be posted from sheets, as before suggested. By 
this process, it becomes absolutely unnecessary to make up 
any pay-roll sheet, thereby doing away with a great amount 
of clerical work and liability to error. 



CHAPTER XII 

DISTRIBUTIONS 

Illustrating the relations between organiza- 
tion and accounting work, and showing how 
labor, material, and expense are distributed 
to both departments and orders. 



CHAPTER XII 

DISTRIBUTIONS 

Organization 

Ordinarily, the organization of a business is understood 
to be the uniting of a body of individuals together by bring- 
ing its personnel into systematic connection and co-opera- 
tion as a whole, or, in other words, to prepare for the trans- 
action of business by electing and appointing officers, com- 
mittees, and others, who are to be vested with authority 
over the various departments, so that each will properly 
correlate and co-operate with all. 

This conception of organization, while correct, is incom- 
plete as it omits the prime consideration in designing an 
organization. The things to be considered first in any 
manufacturing business are its functions and activities, 
irrespective of the individuals to be connected with it ; that 
is, it is the designing of a machine which, after completion, 

must be manned. 

Fundamentally, the division of a manufacturing business 
into departments is the basis for its organization, as the 
different methods of procedure in the different departments 
require widely varying experience on the part of depart- 
mental heads, just as varying experience is necessary in the 
processing of different kinds of material on the part of the 

labor employed. 

The primary organization of a manufacturing business, 
therefore, is its division into such departments as are re- 
quired by the different experience demanded for their opcra- 

221 



II 



il 



il 



I ? 



I 



222 UNIFIED ACCOUNTING FOR INDUSTRIALS 

tion, and then the appointment of a competent personnel to 
operate these divisions. 

Organization, like everything else, goes by assemblies 
and sub-assemblies; in other words, in any organization 
as a whole there are many units of organization. For 
instance, all the purchasing work is a unit, as it takes a 
kindred line of experience and knowledge in all of its 
various branches; the same applies to accounting work, 
selling, etc. Therefore, the first thing to do in forecasting 
an organization is to determine what these prime divisions 
or units should be — thus: 

Administrative Work covers (1) finance, (2) invest- 
ments, (3) insurance, etc. 

Selling Work covers (1) advertising, (2) selling, (3) 
collections, etc. 

General Accounting Work covers (1) billing, (2) 
general bookkeeping, (3) balance sheets, profit and 
loss statements, etc. 

General Office Work covers ( 1 ) correspondence and 
typewriting, (2) mailing and filing, (3) general 
supervision, etc. 

The above relates more particularly to the commercial 
end of a business. In the manufacturing end, under a 
"Factory" or "Works Manager," there would be: 

Purchasing Work, covering (1) buying, (2) receiv- 
ing, (3) general stores, etc. 
Engineering Work, covering ( 1 ) designing of product, 

(2) designing of plant preparation, (3) planning 
work, etc. 

Plant Service Work, covering (1) power and power 
appliances, (2) millwrights and installation work, 

(3) water, steam, electric, and general plant service, 
etc. 



DISTRIBUTIONS 



223 



Processing Work, covering (1) tool-making, (2) 
processing product, (3) equipment maintenance, 
etc. 

Factory Accounting Work, covering (1) time-keep- 
ing and pay-roll, (2) costs and statistics relating 
thereto, (3) inventories, etc. 

Shipping Work, covering (1) shipping, (2) ware- 
housing, (3) transportation, etc. 

The foregoing, a rough classification of the functions 
found in almost any manufacturing business, is given here 
to bring out the basic principle of organization, i.e., the 
fact that departmental creation is determined by the varied 
abilities or experiences of labor required to operate and 
control the factory activities. 

For a manufacturing business, the classification given is 
fairly representative, each prime function embracing only 
such activities or experiences as are closely related and 
similar. In other words, a clerk in the office would not be 
expected to do tool-makers' work, or vice versa. 

Organization Chart 

While organization is no part of the present discussion 
further than it affects the accounting or system of distribu- 
tion, nevertheless a chart (Form 76) is given, illustrating 
a fairly representative organization and grouping functional 
activities, with an arrangement of authorities that is almost 
self-explanatory. 

In so far as the officers are concerned, their particular 
functions are clearly shown on this chart, for the treasurer 
should be, in fact, not in name or by in proxy, in charge of all 
questions relating to finances and accounting, and the secre- 
tary should be, if possible, in charge of all matters relating 
to the general office work, etc., in addition to his legal 
duties as secretary of the corporation. So also, the best 



s 

I 



ill' 



224 UNIFIED ACCOUNTING FOR INDUSTRIALS 

iOrm of organization seems to be that which makes the vice- 
president of the company its general manager, as it gives 
him close working relationship with not only the activities 
of the business, but the finances, policies, etc., that control 
these activities. 

It is not, however, so much the relationship of authori- 
ties that is of interest at the present moment, as it is a 
distribution of expense over an organization, made in such a 
way that direct responsibility can be placed on each depart- 
ment head for the expenditures of his department. For 
example, either one of the commercial expense groups shown 
on the chart (Groups 11 and 31) may be taken and it will 
be quite possible to lay out a distribution sheet reflecting 
the cost of this organization. 

Factory Overhead Sheet for Distributions 

The handling of production under engineering super- 
vision has, during the past few years, made changes so 
rapid and so radical in accounting methods as to have, in 
large measure, completely transformed them. For example, 
cost accounting has become so closely identified with produc- 
tion engineering or planning department work that in many 
lines of industry it must be considered a part of such work. 

The keen competition of today will not permit of distri- 
butions of labor, material, or expense, either individually or 
collectively, being made promiscuously or without reference 
to departments. An excellent illustration of what modern 
business methods demand will be found in the factory over- 
head sheet for distributions (Form 77), wherein are shown 
three divisions of overhead expenditures, namely, labor, 
material, and expense, each divided into a certain number 
of captions. Labor shows four different kinds of activities; 
and materials, five different kinds of commodities; while 
under expense there are seven different classifications. More 



DISTRIBUTIONS 



225 






I 



subdivisions may be made if necessary. All of these are 
governed by account numbers, the Dewey decimal system 
being used in the present instance. All of these numbered 
captions are used later at the time the monthly balance sheets 
are drawn up. 

On the left-hand of the sheet is a complete division of 
the business into departments, numbered according to the 
Dewey decimal system. Thus, each department is desig- 
nated by name and number, a combination of the latter 
with any account number constituting a symbol for distribu- 
tion. To illustrate, 16-1.2 would be the clerical work in the 
bookkeeping department, while 97-1.1 would be the fore- 
men in the wheel department, or 97-1.3 would be general 
non-productive labor in the wheel department. Or, again, 
81-1.2 would be the general non-productive labor in the 
experimental room, and so on for any and all other com- 
binations of departments and accounts numbers, the symbol 
always being the number of the department plus the account 
number of either labor, material, or expense. 

By this method a complete analysis of departmental over- 
head is obtained for the entire plant in such a way that 
comparisons can be made from month to month. What is 
more important still, these can be made in such a way that 
the personnel of an organization can be held directly re- 
sponsible by departmental divisions for any variations due 
to the excessive use of labor, material, or expense, in so far 
as they may have any responsibility for it. 

One great purpose of creating a combination symbol 
composed of department and account numbers, is to make 
possible the use of modern accounting machines, such as the 
Hollerith or Powers machines, for distribution work. 

It must be borne in mind that the important and real 
purpose in connection with the ascertaining and distribution 
of overheads, is to show their percentage or hourly basis 



226 UNIFIED ACCOUNTING FOR INDUSTRIALS 

relation to the amount of productive or direct labor 
employed. 

By this method of distribution, the total direct labor of a 
plant can be checked against the total overhead and a com- 
mon percentage or an hourly rate obtained. The latter is 
much to be preferred when it can be worked out, as it fur- 
nishes a fairly close cost on any unit manufactured where a 
factory is operating on what is known as the continuous 
manufacture basis. 

It is highly desirable, however, in laying out any system, 
to have it so flexible that, if found necessary, the same rela- 
tion between direct and indirect expense obtained as a whole 
may be had for each department. Provision has been made 
for this on Form 77. On this the total amount of direct 
labor for each department will be shown in Column 4.2 and 
a means thereby afforded of ascertaining departmental over- 
heads by amounts and percentages which will enable them 
to be worked out ultimately on an hourly basis. 

It would be quite possible to give a more detailed 
analysis of overhead, but it seems hardly necessary. Labor 
divided into foremen, clerks, manufacturing, and trucking 
or general, would seem to be a sufficient division for the 
control of labor conditions especially where it is segregated 
by departments. The same may be said of the divisions 
given for material which are sufficient for almost any 
business. 

Old methods of accounting employed a large list of 
standing orders, some of which related to labor, some to 
material, some to a combination of labor and material, and 
most of which upon analysis lacked any possibility of placing 
direct responsibility for their variation from month to month 
and year to year. Modern accounting has entirely elim- 
inated this system of standing orders. In the first place the 
elements of manufacture have been reduced to three primes 



DISTRIBUTIONS 



227 



i 



— labor, material, and expense; therefore, all accounting 
work is designed to deal directly with these three items for 
whatever purposes it may be necessary to apply them. The 
method of distribution as illustrated above takes full 
cognizance of this condition in its separation of producing 
from non-producing factors for purposes of administrative 
control. 

In Chapter XIII, "Commercial or Office Accounting/* 
and Chapters XIV, XV, "Controlling Accounts," it will 
be shown to what a great extent factory accounting has 
been effected by a recognition of these three primes. For 
instance, such things as labor, materials, and other distribu- 
tions to standing orders, were formerly made by a voucher 
record or cash book, and were a matter of bookkeeping. 
Today, no such thing as distributions of this character are 
recognized in connection with general bookkeeping, but 
they are taken care of altogether by cost accounting, and 
this cost accounting is always protected by the issuance of 
some kind of an order for the work required, to which must 
be charged the labor, material, and expense involved in its 
execution. 

The following is a brief discussion of the various head- 
ings on the distribution sheet, classified in accordance with 
the arrangement of the sheet: 

Labor 

Account 1.1 — Foremen. This should cover everything 
requiring the attention of the general foreman, foreman and 
assistant or sub-foreman, in every department. 

Account 1.2 — Clerks. All clerical work of any kind, in- 
cluding stenography, typewriting, and general office routine 
in any individual department throughout the factory, should 
be charged to this account. 

Account 1.3 — Manufacturing. Under this caption should 



228 UNIFIED ACCOUNTING FOR INDUSTRIALS 

be entered any and all non-productive labor used throughout 
the factory for any purpose whatsoever in any department 
which is not registered under 1.2 or 1.4. 

Account \A — Trucking. As the expense for trucking 
in a large plant is usually a considerable item, it is advisable 
to set this up as a separate account called 'Trucking,'* even 
when the charges originate through an organized trans- 
portation department. 

The expense is then distributed over the various depart- 
ments in accordance with the facts. 

Column 1 — Total. This is the total of all indirect labor 
for each and every department, by activities, and it is to be 
checked against Column 4.2 — Direct Labor — ^between direct 
and indirect labor. 

Materials 

Account 2.1 — Shipping Supplies. Supplies of this char- 
acter are chargeable to very few departments, probably not 
more than three or four for most businesses. The heading 
covers nails, screws, lumber, excelsior, burlap, paper, crates, 
etc., that are used exclusively for the purpose of shipping. 

These are separated from other non-productive materials 
because they are not consumed in factory operations, but 
are necessary to transportation of goods after the factory 
has got completely through with its processing or assembling 
operations. These items, therefore, are not considered a 
part of factory operations at all, simply a warehousing 
expense which might well come under sales expense. 
Usually, however, they are treated as a part of factory 
overhead. 

Account 2.2 — Operating Supplies. Charged to this ac- 
count will be such items as are consumed in operating the 
plant itself, and must necessarily embrace many small items. 
In other words, it represents material that in no way enters 



DISTRIBUTIONS 



229 



into a product manufactured for sale or a product resulting 
from betterment orders; something that is consumed without 
being in any way directly chargeable to an order of any 
kind; such as waste, cutlery compounds, emory wheels, 
polishing materials, etc., as shown in stores classification of 
same. It should, therefore, be absorbed into the product 
through overhead. 

It is in view of these distributions of materials that the 
classification under stores-keeping has been so specifically 
itemized, enabling the accounting department to know just 
what materials are to be distributed to such accounts as 
this. In the development of stores-keeping no attention has 
been paid to these necessities until quite recently. 

Account 2.3 — Miscellaneous Equipment. A considerable 
explanation is required in connection with this distribution 
account. Miscellaneous equipment includes such items as 
files, hammers, wrenches, drills, tanks, barrels, flasks, trucks, 
fire buckets, brooms, mops, pails, etc., and in addition 
thereto, a large proportion of small cutting tools of all kinds 
which have been issued to the factory, all of which are items 
carried in general stores for expense consumption. They 
are not classed as fixed assets, being short-lived, but they 
always have a residue value in them upon the taking of a 
physical inventory. 

For instance, an inventory might show five dozen half- 
inch twist drills, partially used, and they would be put into 
physical inventory at some valuation and carried into inven- 
tory account as described in Chapter XIV, "Chart of Con- 
trolling Accounts.'' During the year, however, there might 
be ten dozen of the same sized drills issued to the factory 
which would have been charged up to expense or overhead, 
and yet at the end of the year practically five dozen half- 
used drills of this size might be found. Therefore, it is 
obvious that there is always a standing investment in items 



230 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



of the character described above, which have a recognized 
inventory value for a going business. Beyond this, as 
everything of this nature goes into expense, that is, the 
amounts consumed from year to year during inventory 
periods, it must be understood that all such items issued 
from stores to the factory do not at once go to increase the 
controlling accounts, but any increase or decrease in assets 
of this character will have to be recovered upon the taking 
of a physical inventory, and the figures shown by this 
physical inventory will stand as the investment for the next 
succeeding year. 

Account 2A — Fuels and Lubricants. This account re- 
lates to any and all kinds of manufacturing fuels, whether 
gas, oil, or otherwise, that may be used by various depart- 
ments and which cannot be charged directly to any produc- 
tion or betterment order; also any and all lubricants used 
for operating machinery of any kind. 

Account 2.5 — General. This account covers any and 
all items not otherwise chargeable to an order of any kind 
or to the previous four captions, and naturally would in- 
clude all office stationery, forms, etc., used throughout the 
factory. 

Column 2 — Total. This column is the total of all 
materials used as classified by departments. 

Expense 

Account 3.1 — Monthly Depreciation. This account 
covers the total depreciation shown under reserves (See 
Chapter XV, "Chart of Controlling Accounts"). It can 
be worked into a schedule for each department if it is 
desirable or necessary to do so in order to obtain more 
accurate departmental overheads. The basis for such a 
schedule would be the square foot floor space occupied, plus 
the investment of equipment contained thereon; otherwise, 



DISTRIBUTIONS 



231 



the depreciations would simply be shown in this column as 
total and be taken into overhead as such. 

Account 3.2 — Monthly Insurance. This account should 
show an aggregate of all insurance which is to be absorbed 
into overhead on a monthly basis, and it should cover every 
class of insurance as carried on the current ledger accounts. 
In other words, the total insurance applied to the plant 
should be prorated monthly, and the amount shown in this 
column in total. 

Account 3.3 — Monthly Rent. If any buildings or prop- 
erty are rented for the use of the factory, this account pro- 
vides a means for distributing the rental to the depart- 
ments occupying such buildings or property; but if cost in 
the form of rental is charged for the entire real estate and 
buildings of the company, a means is obtained whereby the 
square foot floor space occupied by each department can be 
charged proportionately. 

Account 3.^1 — Electric Current. The same opportunity 
is offered here for arriving at the lighting expense of each 
department if proper meter arrangements are provided to 
do this. Provision is also made in this account to cover 
any and all power used by the departments, either in- 
dividually or collectively, provided proper meter arrange- 
ments are introduced for obtaining the consumption of same. 
To this end it is to be hoped that the power plant will be 
run as an independent unit and that all current for light and 
power will be metered to each and every department ; other- 
wise the expense of the power house will have to stand as an 
undistributed overhead to be prorated on some other 
basis. 

Account 3.5 — ^Taxes. This account covers the distribu- 
tion of a monthly prorated amount of taxes and must cm- 
brace not only the real estate and personal property taxes 
of the company, but also any corporation or other taxes 



i%i 



232 UNIFIED ACCOUNTING FOR INDUSTRIALS 

that shoxild properly be distributed over the product manu- 
factured, by an absorption into overhead. 

This distribution account is related to the controlling 
account "Taxes Accrued," and consequently has a prorated 
distribution table in accordance with the demands of this 

account. 

» 

Account 3.6 — Freight and Express. This account relates 
to the incoming freight and express on all goods of which 
there would be very little departmental distribution, the 
principal amounts being charged up to general stores, power 
plant, etc. 

Account Z.7 — Overhead Unclassified. This account is 
for the collecting of such items as could not very well be 
distributed to any of the foregoing accounts. It might 
embrace contract work for window-washing, janitorship, or 
cleaning of buildings. In other words, this provides a 
special column for things that are not regularly applied to 
overhead or could not be classified in any other way. 

Column 3 — Total. This column is the total of all 
expense which goes to create overhead for the month and 
is shown by totals for each department. 

Column 4.1 — Grand Total. This includes the grand 
total overhead expense of each department together with the 
grand total of all overhead for all departments. 

Column 4.2 — Direct Labor. This column is provided 
for statistical purposes only, to permit of ready comparisons 
between direct and indirect labor, and is not to be treated 
as an account in any way. 

Redistribution 

Bearing in mind the fact that there are two kinds of 
overheads — those which belong to each individual produc- 
tive department, and also the general overhead or expense 
of all non-productive departments which must be prorated 



DISTRIBUTIONS 



233 



over productive departments — it becomes necessary to make 
a redistribution of the latter to the former. 

Column 4.3 — Prorated Overhead. In this column will 
be placed a redistribution of all general overhead, according 
to the percentage of the direct labor for each department 
as shown in Column 4.2. In some instances it is con- 
sidered more conservative and more equitable to prorate 
over the productive departments according to the overhead 
of these departments than to just the productive labor, prin- 
cipally for the reason that there are less variables for these 
departments on overhead charges than there are for the 
productive labor. Column 4.3 added to the overheads shown 
in the productive departments, Column 4.1, will equal full 
overhead, Column 4.4. 

Record of Production, Betterment, and Repair Orders 

This sheet (Form 7%) is in reality much more than a 
record sheet ; it is a ledger sheet which, while debiting and 
crediting labor, material, and overhead, at the same time 
makes possible an analysis of the distribution of all produc- 
tion, betterment, and repair orders, to labor, material, and 
expense. Furthermore, it closes out all order costs into 
unit costs, and gives absolute control of all inventory valua- 
tions as regards production, betterment, and repair orders 
(Forms 40-42). 

It was in the development of this "Production Ledger," 
or "Record of Production, Betterment, and Repair Orders," 
that the real unification between cost and general accounting 
took place, as it was absolutely the finding of the missing 
link. 

This is called a "Record for Production, Betterment, 
and Repair Orders" principally as a matter of convenience. 
It is recommended, however, that when a plant is sufficiently 
large a set of sheets be provided for production orders. 



J 



234 UNIFIED ACCOUNTING FOR INDUSTRIALS 

another set for betterment orders, and another for repair 
orders. Under any circumstances, a separate set should be 
kept for repair orders which are closed out into Column 11, 
after which follow the account and number of the account 
to which they will go, as per the classification of assets. 
What this classification of assets is has been explained fully 
in Chapter IV, under "Stores-Keeping." 

There are two things to be considered in connection with 
this distribution sheet: 

First, that this classification of assets permits better- 
ments to be distributed under the column of account 
and number of account on this recording sheet. 

Second, that all repair orders must be made according 
to the same classification as betterment accounts. 

In other words, the value of all assets remains under 
assets at their original cost. From this inventory value, a 
certain depreciation is written off into liabilities each month 
in order to stabilize the cost of production. This percentage 
of depreciation is sufficiently large to cover not only natural 
depreciation, but also repairs that may be applied to recover 
depreciation. Therefore, all repair orders should be made 
out according to the inventory classification of assets, and 
not to the individual tool, except in cases of very large, 
expensive, and complicated machinery, such as printing 
presses. In such cases it becomes necessary to keep track 
of repairs on an individual machine so that obsolescence 
may be decided upon before the cost of repairs becomes 
greater than the interest on investment plus depreciation on 
a new machine. 

Each production order at the end of a month will occupy 
but one line on this sheet, columns being provided to show 
the order number, sales order number, quantity ordered, 
and, when finished, the actual quantity made. Further 



DISTRIBUTIONS 



235 



columns provide for the symbol or description of the item 
covered by the production order, and other columns show 
the "Date Started'* and the "Date Finished." Under 
"Material" a column is shown for "General Stores" and for 
"Semi-Finished Stores," either column being used according 
to whether it is a processing order or an assembling order. 
A column is provided for all the labor applied to any pro- 
duction order, and three columns for overheads, one to show 
"Productive Hours," one the "Overhead Rate" on either 
an hourly or percentage basis, and one the total "Overhead 
Amount" applied to production orders. 

Thus is shown the application of labor, material, and 
expense to orders, the total of which, of course, is the total 
cost. This total cost divided by the quantity made would 
give the cost of each. Therefore, for any and all purposes, 
cost has been closed up on this sheet and it is only necessary 
to transfer the goods at this cost price to the running inven- 
tory or other record in which such goods should appear. 

Column 7 of the record of production, betterment, and 
repair orders shows the total of the unfinished production 
orders at the end of the month, which are transferred to 
Column 1 of the record for the following month. Then any 
additional material, labor, and expense required to complete 
the production order will be added. 

Whenever an order is closed out into Column 6, it 
creates a credit to labor, material, and expense, according 
to the amount shown, and becomes chargeable either to 
Column 8, "Semi-Finished" or "Component Stores," to 
Column 9, "Finished Stores," or, if a betterment, to Column 
10, "Betterments," in which case the asset account number 
to which it is to be distributed will be shown in the column 
headed "Account." What has been said of betterments will 
also apply to Column 11, "Repairs." 

In the discussion of "Controlling Accounts" (Chapters 



236 UNIFIED ACCOUNTING FOR INDUSTRIALS 

XIV and XV), it will be shown how the totals of these 
several columns are taken directly into controlling accounts 
as debits or credits, as the case may be. 

This "Record of Production, Betterment, and Repair 
Orders" offers the same possibilities for accounting machine 
distribution work as departmental distribution sheet does. 
Thus, any requisition bearing an order number plus 2 would 
distribute a credit to general stores. Any order number 
plus 3 would distribute a credit to all requisitions on com- 
ponent stores. In the handling of labor, a labor ticket with 
the order number plus 4 would distribute all labor to order 
numbers and at the same time build up a total of productive 
labor. Again, if on each productive labor ticket there is 
also put the amount of overhead on whatever percentage or 
hourly basis it calls for, 5 can be added to the order number 
of that ticket, which will distribute all the overhead to 
Column 5 and to all production or betterment orders 
accordingly. 

When this distribution has been filled in on the sheet, 
it then becomes simply a question of using a comptometer 
or adding machine to obtain credits to Column 6, and 
charges to Columns 7, 8, 9, 10, and 11. 

In other words, as before stated, the whole arrangement 
of this distribution system is purposed, so far as possible, 
for handling by office machinery instead of ordinary clerical 
work, which not only insures much greater economy, but 
also a much greater accuracy, and at the same time gives a 
much wider range for temporary or specific statistical 
systems. Furthermore, it enables costs to be compiled on a 
cost card as shown below. 

Production Cost Card 

One of these cards (Form 79) can be made out for each 
piece and part manufactured and filed in order of piece and 



DISTRIBUTIONS 



237 



part number. A summary of the total costs of labor, 
materials, and overhead on four production orders is pro- 
vided for on each card, thus furnishing a comparison of the 
resulting costs of the various production orders as they 
come through. When a card has been filled up by the com- 
pletion of four production orders, another card should be 
made out for succeeding orders and filed directly behind 
the first one, numbering the cards in rotation under each 
piece number; thus, piece No. 1000 might have cards 1, 2, 
3, and 4, etc., as they become filled up; and so on for each 
piece, numbering from 1 up under each piece number. 

When a production order is completed, the distribution 
department should enter the summary of the costs on this 
card. On the front of the card at the top will be given 
the grand total of the cost summaries, and below will be 
given the details. At the top of the card will be shown 
the production order number, the date started and date 
finished, labor and material costs, and overhead, making the 
total cost; and then the unit cost, or cost of one, will be 
shown. Following this will be the total cost of labor by 
operation, this information being furnished by the time- 
keeper to the distribution department. 

On the line showing each operation has been provided 
a small letter "d". If this operation was done by day-work, 
this letter will remain, but if it is done as piece-work, the 
"d" will be made into a "p" in black ink; and if done as 
premium work, the "d" will be made into a "p" in red ink. 
On the line of each operation will then be given the date 
the operation was completed, the quantity passing the opera- 
tion as good, the quantity rejected for scrap, the quantity 
rejected for repairs, the total productive hours, and the 
total labor cost for the operation. On the reverse side of 
the card, on the last line for labor, will also be shown the 
same information for any labor expended on defective 



238 UNIFIED ACCOUNTING FOR INDUSTRIALS 

repairs. At the bottom of the reverse side will then be 
shown the quantity of each kind of material drawn and the 
total cost of each kind. 

As these cards show the exact cost of production of 
various pieces, they should be available only to such execu- 
tives as it is desired to have fully informed concerning costs, 
and to the particular employees whose duty it is to keep 
them. 

If the distributing or accounting machines are not 
employed (smaller concerns are perhaps not justified in 
using such machines), the following method of procedure for 
distribution work in connection with time tickets, requisi- 
tions, etc., is recommended for consideration. 

An organization chart (Form 76) and a distribution 
sheet as per the factory overhead (Form 71^ having been 
made up, it simply remains to make a set of pigeonholes to 
correspond to each combination number, that is, the pigeon- 
holes will be numbered by departments down the side and 
by activities and commodities across the top ; this combina- 
tion, of course, always forming a charge account. As the 
time tickets and requisitions come in from day to day, they 
are to be sorted into these pigeonholes, which sorts them to 
exactly the classification shown on the factory overhead 
distribution sheet. At the end of the month, the proposi- 
tion is one simply for an adding machine. 

First, the tickets can be totaled by departments and by 
account numbers as per the overhead sheet, which will 
give a complete departmental distribution of non-productive 
labor, material, and direct labor. Second, the tickets and 
requisitions may then be totaled on an adding machine 
according to order numbers. These can then be posted 
direct to the "Record of Production, Betterment, and Re- 
pair Orders'' (Form 78), which method of procedure for 
both departmental distributions and for order number distri- 



DISTRIBUTIONS 



239 



butions is simple and accurate, and does away with a great 
deal of clerical work in posting. 

In Chapter XI, "Employment and Handling of Labor,** 
a complete method of distribution was shown, which is 
preferable, the whole proposition in such case practically 
being an adding and calculating machine operation. 

Whether a set of pigeonholes is used or whether account- 
ing and distributing machines are used, depends somewhat 
on the nature of the business, volume of work, and the 
amount of detail that is required. 

Sales Analysis Sheet 

A tentative "Sales Analysis Sheet" is shown in Form 80, 
which illustrates how a monthly distribution of sales and 
costs can be arrived at by simply posting each day the total 
sales and the total cost to this sheet, using an adding 
machine at the end of the month to get the totals of all 
sales, which are then transferred to the monthly balance 
sheets. The method of procedure is to take the sales 
directly off the shipping orders each day together with 
costs, total them on an adding machine, and transfer them 
to this sheet; the method of handling sales and shipping 
orders nearly always being peculiar to each different kind 
of business. 

This analysis sheet, which is referred to in several 
instances in Chapters XIV, XV, "Controlling Accounts," 
is presented here in order to make the working of the 
accounts involved perfectly clear. 



CHAPTER XIII 



COMMERCIAL OR OFFICE ACCOUNTING 



i 



Explaining in detail the elements and work- 
ings of a voucher system for handling cash; 
the detail of controlling accounts; and a 
commercial distribution of expense. 



CHAPTER XIII 

COMMERCIAL OR OFFICE ACCOUNTING 

The Function of Commercial Accounting 

The discussion which follows is not intended to be an 
explanation of bookkeeping in the ordinary sense of the 
word, but rather of commercial accounting which is the 
preparation for a distribution of summarized current re- 
ceipts and disbursements to certain controlling accounts. 

Further, it shows how and why these- distributions in 
industrial enterprises are made by cost rather than by 
ordinary bookkeeping methods, and how this cost account- 
ing is then linked with controlling accounts through the 
medium of commercial accounting. 

The Voucher System 

The best, and in fact the only scientific way of handling 
general accounting work, is by the voucher system, in which 
vouchers are used for entering all invoices, thus eliminating 
the old-fashioned purchase ledgers and the distributions con- 
tained therein. The voucher system herewith proposed 
consists of a purchase voucher (Form 81), which, in con- 
nection with a "Voucher Record" (Form 84), constitutes 
a purchase creditor's ledger, or a statement of the account 
with each purchase creditor. The voucher record, as its 
name implies, is a record of all these accounts and at the 
same time a distribution of all purchases to summarized or 
prime accounts, as will be explained further on. 

These vouchers are entered on the voucher record, which 

243 



244 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



is closed monthly irrespective of whether any of the vouchers 
may or may not have been paid. This is an important fact 
to remember. The total amount of each column of the 
voucher record shown is then carried over to the private 
ledger or controlling accounts. 

There is one thing in connection with the use of this 
form of voucher record to which attention is called, and 
concerning which reference has been made elsewhere; 
namely, that the expenditures of any manufacturing busi- 
ness always reduce themselves to three primary elements, 
i.e., labor, material, and expense. This is one of the cardinal 
principles of modern accounting, and advantage is taken of 
this to simplify controlling accounts. 

General Stores Under the Voucher System 

In order that this may be thoroughly understood, it is 
necessary to refer to general stores again, and to review 
enough of the previous discussion to connect them with the 
vouchering of materials. It will be recalled that general 
stores, from an inventory point of view, embraces every- 
thing that is purchased in the shape of materials, tools, 
equipments, etc. General stores may be issued to the fac- 
tory only upon a requisition which must always show two 
things: first, the department which draws the material from 
stores, and, second, the order number to which the material 
is to be charged. If material is to be used for goods which 
are to be manufactured for sale, it must be charged to a 
production order. If for construction work or the installa- 
tion of new machinery, it must be charged to plant better- 
ments. 

For instance, if a new^ machine of some kind is purchased, 
it will be received into general stores, the same as anything 
else that is bought, and on the voucher record the amount 
will simply appear as a charge to "General Stores." When 



It' 



I. 



COMMERCIAL OR OFFICE ACCOUNTING ^.^ 

it is desired to install this machine, a betterment order is 
issued which authorizes a'requisition drawing this machine 
out of general stores. To this betterment order will be 
charged any additional material which is required, the labor 
costs of installing the machine, and also some proportionate 
amount for overhead expense. Upon the completion of the 
installation, the betterment order is closed up and the total 
cost handed to the accounting department, there to be posted 
to whatever classification of assets it may belong. 

Similarly, if any construction work on the buildings or 
any other work that would create a fixed asset, is to be done 
a betterment order must be issued. In this way the accurate 
cost of all betterments is secured and placed in the proper 
asset account. 

The same thing applies to repairs, and the repair order 
must always show two things: first, the department of the 
factory for which the repairs have been made, and, second 
the classification of assets that they are made on, so that 
the distribution of repair orders is made in the same manner 
as betterment orders. 

From this explanation it will readily be understood why 
the old time voucher record distribution has given way 
before modern accounting methods, and why no distribution 
work IS done on the present voucher record or in the con- 
trolling accounts other than that given under primary cap- 
tions. Distributions are no longer a part of ordinary book- 
keepmg; they belong to the cost system and are recapitu- 
lated into controlling accounts. 

Purchase Voucher 

The purchase voucher (Form 81) is printed on sheets 
5 X 8 mches and consists of an original and a duplicate. 
When an invoice, properiy passed and O K'd for receipt, 
quantity, price, etc., is received by the accounting depart- 



246 UNIFIED ACCOUNTING FOR INDUSTRIALS 

ment, the extensions are first proved and then entered on 
the purchase voucher. The purchase voucher must show 
the name and the address of the purchase creditor, date of 
invoice and amount. The invoice is entered on the voucher 
as soon as it is received, the number of the voucher is placed 
on the invoice, and the two forms are fastened together, 
and are then filed in a temporary file, in alphabetical order, 
until the voucher is entered in the voucher record. At the 
end of the month, the voucher is closed and entered upon 
the voucher record for distribution thereon, into the proper 
account or accounts. 

Where it is desired to discount or pay an invoice before 
the end of the month, such invoice is entered on the voucher 
which is thereupon closed out as complete, is O K'd by 
the necessary authority, and the total posted into the voucher 
record. In entering the amounts of these vouchers on the 
voucher record in the accounts payable column, the gross 
amount of the voucher is entered, that is, no discounts are 
to be deducted at this time, provision being made for dis- 
count earnings in the check register in the column **Dis- 
counts on Purchases." 

After vouchers have been closed out at the end of the 
month and entered in the voucher record, they should be 
filed in an ''Unpaid Voucher File" until paid. 

In order to provide for the payment of vouchers at the 
proper time, a monthly "one to thirty-one" card tickler 
(Form 82) should be kept, and the name of the purchase 
creditor together with the numbers of the vouchers which 
are to be paid on any particular date should be entered on 
the tickler card of that date. Several entries can be made 
on one card. On the date of payment, the vouchers are 
given to the cashier who passes them for payment and has 
the necessary checks drawn. Each check must show the 
number of the voucher paid, and its acceptance in payment 



COMMERCIAL OR OFFICE ACCOUNTING 



247 



of the voucher thus indicated will make it a complete legal 
receipt for the same. The duplicate voucher accompanies 
the check as a remittance slip, and the original is filed 
alphabetically in the paid voucher file. After a voucher 
has been paid, all of the invoices covered by it are marked 
"Paid" and filed alphabetically. 

By making all payments by check in connection with a 
voucher system as outlined above, a complete and proper 
distribution of the payments is obtained, and, as the voucher 
is not attached to the check and does not pass through the 
bank but goes direct to the payee, it does not reveal, as 
does the ordinary voucher check, what bills are being paid, 
dates, etc., for the information of everyone through whose 
hands the check passes. 

Charge Vouchers 

In order to provide for adjustments on purchase vouch- 
ers after they have been closed, charge vouchers (Form 83) 
are used. In order that the two types of vouchers may be 
easily distinguished, it is suggested that the charge voucher 
be printed in red, as indicated on form. 

Charge vouchers should be numbered from 1 up, the 
same as the purchase vouchers, and the back page of the 
voucher record should be used to record all charge vouchers, 
where they should be entered in the same manner as the 
purchase vouchers. In paying a purchase voucher on which 
a charge voucher is deducted from the full amount, the 
number of the check should be placed in the proper column 
on the charge voucher record in the same manner as on the 
purchase voucher record. In the check record (Form 86) 
will be shown in the "Accounts Payable" column the full 
amount of the purchase voucher, and on the "following line, 
in red ink, the amount of the charge voucher which, being 
deducted, leaves the amount of the check (except for cash 



248 UNIFIED ACCOUNTING FOR INDUSTRIALS 

discount). This amount is entered in the "Net Cash" 
column. 

In case a claim is made after a purchase voucher has 
been paid, and there are no other purchase vouchers from 
the same concern awaiting payment, a charge voucher will 
be used to adjust the claim, an invoice being sent to the 
purchase creditor to notify him of this claim. If this invoice 
be paid in cash, the amount should be entered on the incom- 
ing cash sheet (Form 85), and extended in the sundry 
column; the date of payment and "Cash Received" folio will 
then be posted to the charge voucher record and to the 
credit of the "Accounts Payable" column. "Deductions" 
column on the purchase voucher should be used whenever 
possible, to keep the number of charge vouchers within the 
smallest possible limits. Charge vouchers should be ap- 
proved by some authorized person, and filed directly behind 
the purchase vouchers from which they are to be deducted. 

Voucher Record 

The voucher record (Form 84) provides for the date 
of the voucher, the voucher number, and the name of the 
creditor. These particulars must be entered in the voucher 
record when making the first entry. The extensions into 
the money columns on the voucher record should not be 
made until the voucher is closed out, usually at the end of 
the month. When closed, the total amount of the voucher 
is entered in the "Accounts Payable" column and the total 
of this column credited to this account in the private ledger. 
Voucher record sheets should be numbered consecutively 
and each sheet accounted for. 

At the end of the month, as soon as the total amount of 
any voucher is entered in the "Accounts Payable" column, 
it is extended in the distribution columns to the accounts 
to which it should be charged. As all bills received by the 



COMMERCIAL OR OFFICE ACCOUNTING o^n 

company are either for material or expense, and as all 
material (with the possible exception of ofHce supplies) is 
charged to "General Stores," the distribution columns pro- 
vided in the form are sufficient. These, as will be seen by 
the captions, correspond to the controlling accounts, to 
which the total under each caption must be charged monthly 
in the private ledger. 

All material bought, with the exceptions noted above, is 
charged direct to "General Stores," and expense divided 
between "General Expense" and "Advanced Expense." 
^'General Expense" will be divided into "Commercial" and 
"Overhead." Commercial expense is that which applies to 
the commercial or office end of the business, and the items 
from this column will be charged to the various subsidiary 
accounts, as wiU be explained under "Commercial Expense 
Distribution Sheet" (page 258). To the "Overhead" 
column will be posted all items of expense which are 
applicable to the manufacturing end of the business, for 
distribution to subsidiary accounts, as explained in Chapter 
XII, under "Factory Overhead Sheet for Distributions." 
In the "Advanced Expense" column will be charged all 
expei -es the full benefit of which does not accrue during 
the current month, but which are prorated into actual ex- 
pense charges for the period of time to which they properly 
belong. In the sundry column will be entered the distribu- 
tion of any items on a voucher which cannot be charged to 
any of the previous accounts. 

It is not necessary to post each individual check imme- 
diately it is made out in payment of a voucher, as the check 
record (Form 86) shows the voucher number covered by 
the check. It is advisable, however, to post the check record 
mto the voucher record daily, entering in the voucher record 
the "Date Paid," the "Check Record Folio," and the 
"Check Number." 



250 UNIFIED ACCOUNTING FOR INDUSTRIALS 
Incoming Cash Sheet 

This sheet (Form 85) is designed for a record of cash 
received by the company, and all cash received should be 
entered thereon. It takes the place of the debit side of 
what would otherwise be the ordinary cash book which, in 
this system of accounting, is not used. For purposes of 
auditing, these cash received sheets are numbered con- 
secutively when printed, and every sheet is to be accounted 
for, whether it is used or not. In case of error in making 
an entry, it should not be erased but a red line should be 
drawn through the entry. The purpose of the various 
columns are explained below. 

Net Cash. Each day the exact amount of cash received 
from whatever source must be entered in the "Net Cash" 
column and deposited in the bank ; the total of these items, 
at the end of each month, is charged to the controlling ac- 
count A-1, "Cash in Banks" (see Form 92), in the private 
ledger. 

Discount on Sales. In this column are entered all cash 
discounts taken by and allowed to customers. If, for any 
reason, a discount is taken but is not allowed, the check 
should be returned to the customer for correction and no 
entry made. At the end of the month, the total of this 
column is charged to the subsidiary commercial or office 
expense account, "Discounts Allowed." 

Freight and Express—Commercial. In this column will 
be entered all freight charges which have been deducted by 
customers and allowed. In case freight deduction is not 
allowed, the remittance should be returned and no entry 
made. The total of this column at the end of the month is 
charged to the subsidiary commercial or office expense ac- 
count, "Freight and Express— Commercial." 

Sundry. The "Sundry" column is for any other charge 
items not specifically provided for on this sheet, such as 



COMMERCIAL OR OFFICE ACCOUNTING 



251 



interest paid, special deductions allowed to customers, 
etc. 

All advanced expense interest should be prorated 
monthly, the same as other advanced expenses, and dis- 
tributed on an advanced expense prorating sheet, over the 
months covered. 

Accounts Receivable. In this column is entered the 
total amount which should be credited to customers ; there- 
fore, each amount in this column must include not only the 
net cash received, but all discounts and deductions taken by 
customers and allowed, as specified in the foregoing columns. 
The total of this column at the end of the month is credited 
to the controlling account A-3, "Accounts Receivable," in 
the private ledger. 

Notes Receivable. In this column is entered the face 
value of any notes receivable paid, but not interest received 
on these notes. The total of this column is credited monthly 
to controlling account A-7, "Notes Receivable," in the 
private ledger. 

It is a much better plan to handle notes receivable on 
the income cash sheet than by journal entry or by posting 
direct from the notes book, if one is kept. In this way, 
the face of the note, if discounted, is entered in the "Notes 
Receivable" column on the credit side of the incoming cash 
sheet, and the amount of discount in the "Advanced 
Expense" column on the debit side. This also applies to 
customers* notes discounted by the company, which are 
entered to the credit of "Notes Receivable" on the incoming 
cash sheet, and the interest charged in "Sundry" column to 
"Advanced Expense Interest." 

Notes Payable. In this column are entered the face 
amounts of any of the company's notes which are discounted, 
the discount being charged to Advanced Expense and pro- 
rated aver the period covered. The total of this column 



252 UNIFIED ACCOUNTING FOR INDUSTRIALS 

at the end of the month is credited to the controlling account 
D-3, "Notes Payable," in the private ledger. 

Interest Received. In this column will be entered all 
interest received. At the end of the month, the total of this 
column is carried to the subsidiary commercial or office 
expense credit account, "Interest Received." 

Sundry Accounts. This column should contain the 
name and amount of any item for which a check may have 
been received and which would not come under any of the 
previous captions. In the monthly posting of this column 
to the controlling accounts of the private ledger, it must 
be analyzed, hence the necessity of enumerating the items 
by name. 

Folio. In the folio column can be written the initial of 
the bank in which each check is deposited, and, if desired, 
the date of deposit, the total checks to one bank each day 
checking with the amount of deposit on the check record. 
The incoming cash sheets should be proved at the bottom 
of each page to see that the charge side balances with the 
credit. 

Check Record 

The check record (Form 86) is used for recording all 
checks drawn, it being understood that all cash disburse- 
ments are provided for by a petty cash system. In connec- 
tion with this check record, checks must be used in pads, 
each check being numbered consecutively. If a check is 
spoiled or is not used after being made out, the space for 
this check in the check record must be marked "Void," as 
every check must be accounted for. 

The voucher number is entered in the check record, 
following the check number. No detail distribution, such 
as labor, material, various kinds of expenses, etc., is pro- 
vided for in the check record, as is common in the ordinarv 



COMMERCIAL OR OFFICE ACCOUNTING 



253 



cash book, because the voucher record is used for all such 
distributions, and there must be a voucher for all disburse- 
ments. In this way distributions are all made at one place. 
The columns of the check record are discussed below. 
Net Cash. In this column are entered the exact amounts 
of the checks drawn, the total of which, at the end of the 
month, is carried to the credit of the controlling account 
A-1, "Cash in Bank" (see Form 92), in the private ledger. 
Discount Purchases. In this column is entered the 
amount of any discount taken from purchases when paid, 
as called for on the voucher for which the check is drawn. 
The total of this column, at the end of the month, is carried 
to the commercial expense credit account, "Cash Discount 
Earned." 

Accounts Payable. In this column is entered the total 
amount which is to be charged to the voucher record, that 
is, it covers the cash paid and also the discounts taken. The 
total of this column at the end of the month is charged to 
the controlling account D-1, "Accounts Payable," in the 
private ledger. 

Notes Payable. In this column are entered the amounts 
of all notes paid by the company. At the end of the month 
the total is charged to the controlling account D-3, "Notes 
Payable," in the private ledger. 

Sundry Accounts. The "Sundry Accounts" column pro- 
vides a place for entering the name and amount of any 
item for which a check may have been drawn, and which 
would not come under any of the previous captions. A 
monthly posting is made of this column to the controlling 
accounts. It must be analyzed according to the items 
enumerated, hence the necessity of entering the details in 
this column. 

Deposits. In the deposit column will be entered the 
amount of each bank deposit. The total amount of this 



254 UNIFIED ACCOUNTING FOR INDUSTRIALS 

column, or columns in case more than one check record is 
kept, should agree with the "Net Cash" column on the 
cash received sheet. 

Balance. The daily balances of "Cash in Bank" should 
be shown in this column. A separate check record must be 
kept for each bank in which an account is carried, and a 
distinct series of numbers used for each check record sheet, 
as well as for checks. 

When checks are drawn upon one bank for the purpose 
of transferring money to another bank, the amounts should 
be entered in the sundry column of the check record sheet 
of the bank from which the amount is withdrawn. Thev 
should also be entered on the incoming cash sheet, and in 
the "Deposits" column of the check record sheet of the 
bank to which the amount is transferred. At the end of 
each month, cash received and cash paid out will be re- 
capitulated upon the final cash received sheets for the month, 
and postings made from this recapitulation to the private 
ledger accounts. 

Petty Cash Record and Voucher 

For the handling of petty cash, what is commonly known 
as the "Imprest System" is recommended. In order to carry 
this out, the cashier must be provided with some fixed fund, 
anywhere from $200 to $500, or with an amount sufficient 
to cover expenditures of this character for, say, one month. 
This should be considered as a cash drawer fund, to be 
accounted for by cash in drawer, plus amount of any petty 
cash vouchers not yet turned in for refund. 

The amount of this fixed fund appears as a standing 
charge in Petty Cash account (A-2) in the private ledger, 
and it can be affected only by an increase or decrease in 
the original amount of petty cash. The checks issued to 
reimburse petty cash fund for its expenditures are not 



COMMERCIAL OR OFFICE ACCOUNTING 



253 



charged to the controlling account "Petty Cash," but are 
simply entered in the "Receipts" column in the petty cash 
book or petty cash disbursements sheet (Form 88). The 
balancing charges for the outgoing cash are made monthly 
from the petty cash book, as explained later. 

In order to secure a complete record of all petty cash 
expenditures, a petty cash voucher has been provided, to 
be used in conjunction with the petty cash record. (See 
Forms 87, 88.) These vouchers are to be numbered con- 
secutively and each one must be accounted for. In case of 
an error in making them out, they should not be destroyed, 
but marked "Void," and filed with the paid vouchers. 

One of these petty cash vouchers should be made out 
for each item of cash expended, and must always be signed 
by the person to whom the money is paid. It will then be 
entered in the petty cash book, under the distribution ac- 
count number to which it is to be charged. If the voucher 
is in payment of an invoice, the invoice will be indorsed 
with the date paid and the petty cash voucher number. This 
invoice should be approved by the proper authority before 
being paid. The voucher, together with the invoice, will 
then be placed in the cash drawer in place of the cash 
paid out. 

Each night, the cash in the drawer must be counted 
and the sum of this, plus the vouchers in the drawer, must 
agree with the standing amount charged to petty cash. 

When the cash in the drawer becomes low, or at stated 
periods, say once a month or once a week as may be found 
the more advantageous, a check is drawn to the order of 

petty cash in payment of "Petty Cash Vouchers, No 

to No "for the exact amount of these vouchers. This 

check will be cashed and the money placed in the drawer, 
bringing the funds back again to the original amount. A 
check drawn to reimburse this fund will be entered in the 



256 UNIFIED ACCOUNTING FOR INDUSTRIALS 

check record in the sundry column, and will be a non-post- 
ing item, the postings being the monthly totals of the 
distribution columns in the petty cash book, which are 
posted to the controlling or subsidiary accounts, as the case 
may be. The redeemed vouchers must, of course, have 
first been extended in the petty cash book, as explained 
above. 

It must, of course, be remembered that on the last day 
of each month, all petty cash vouchers which have been 
extended in the petty cash book must be reimbursed by 
check. If this is not done, the distribution of these on the 
petty cash book will throw the books out of balance. 

It will also be understood that all cash received must 
be deposited in the bank and never be diverted into petty 
cash. In case stamps are received from customers in the 
settlement of their accounts, the petty cash drawer should 
purchase these stamps and the cash so received for them 
be deposited. 

The advantages derived from the use of the petty cash 
vouchers and records are: 

1. A voucher is secured for every petty expenditure. 

2. The work of balancing the petty cash is minimized, 

as there is always a definite amount against which 
it is to balance. 

3. The system provides a means for correctly making 

a distribution of all petty cash expended and the 
absorption of these expenditures into the proper 
general accounts. 

Journal Register 

Modern accounting has almost done away with the 
once much used general journal, by dividing it up into books 
of special functions wherever the volume of similar items 
has sufficiently increased to make it possible. All of the 



COMMERCIAL OR OFFICE ACCOUNTING 257 

foregoing forms are examples of this practice. There is, 
however, some necessity for journalizing in a general way,' 
and in connection with the foregoing it is recommended 
that a journal register be used, somewhat similar to that 
shown in Form 89. 

It will be noted that columns have been provided for 
the more frequently used accounts, i.e., accounts receivable, 
accounts payable, notes receivable, notes payable, and a 
sundry column, for any miscellaneous entries. In this 
manner the monthly totals can be posted instead of each 
individual item. 

Journal Voucher 

In connection with the journal register, a journal 
voucher (Form 90) has been provided for making journal 
entries of all kinds, thus affording a means for properly 
authorizing these entries. These journal vouchers must 
be numbered in sequence and filed in a binder provided for 
them and every number must be accounted for. If, for 
any reason, one is spoiled by accident or otherwise, it must 
be marked "Void" and filed in the binder in its place of 
sequence. 

General Ledger 

A general ledger should be provided, in loose-leaf form, 
to be used as a subsidiary book to the private ledger. This 
ledger should not be filled with the miscellaneous accounts 
so frequently put into a general ledger, but should, on the 
contrary, contain little else besides the accounts included in 
the analysis of commercial or office expenses (see page 
258), and those included in the analysis of factory over- 
head (see under Chapter XII), all of which are a part of 
the monthly balance sheet sets. 

The accounts in the general ledger should be opened in 



2 eg UNIFIED ACCOUNTING FOR INDUSTRIALS 

the order given on the monthly balance sheet so that in 
taking off the balances at the end of the month they will 
conform to the same order of arrangement. 

All of the accounts under analysis of commercial or 
oflfice expense must be closed out each month into Com- 
mercial Expense account, J-1 (see Form 92). The total 
of each amount in the analysis of factory overhead must 
be closed out each month into Overhead account, J-2. These 
accounts do not need to be journalized by individual items; 
they are to be simply balanced out each month into Com- 
mercial Expense and to Overhead. In other words, these 
accounts are simply the totals of the columns on the distri- 
bution sheets, and cover in total the items entered in detail 
in the corresponding columns. 

Commercial Expense Distribution Sheet 

The detail of -his analysis, by captions, is also illustrated 
on the set of balance sheets in Form 1, the latter showing 
the divisions as between ''General Commercial Expense" 
and "Selling Expense." The commercial expense distribu- 
tion sheet is in reality a general ledger sheet and contains 
the general ledger entries for an analysis of commercial 
expense which is to be carried in total monthly to Profit 

and Loss. 

Comparison is made in the summaries of these accounts 
to show: first, the percentage of commercial expense as a 
whole to sales, and, second, the percentage of selling expense 

as such to sales. 

Attention is again called here to the value of these 
percentages as a guide in conducting a business. If balance 
sheets similar to those illustrated in this work have been 
used for a period of some months or years, a number of 
definite percentage values will have been discovered. For 
instance, if it is known that the commercial percentage 



COMMERCIAL OR OFFICE ACCOUNTING 



259 



averages 12% a month, this indicates what the normal con- 
dition of business should be, and the accounting methods 
herein illustrated make possible an analysis to determine 
the cause for any variations of this percentage. 

What has been said of commercial percentages also 
applies to selling expense. If it is known that the average 
selling expense is 8% of the total sales, it is only natural to 
look for a variation from this as a first point of interest 
each month, and then to determine the cause for any such 
variation. 

The same conditions apply to overheads. If overheads 
are running at an average of 80% and variation takes place, 
these accounting methods provide an analytical means for 
determining the cause therefor. With the assurances that 
these percentages are reasonably correct, any executive may 
always start a detail examination of his monthly balance 
sheets with a comfortable feeling. 

General Commercial Expense 

It will be noted that each column on the commercial 
expense sheet (Form 91 ) is numbered with its account num- 
ber. The following is a brief description of the charges 
which are made to each account: 

Salaries — Officers. This account should include the 
salaries of the general officers of the company, and all other 
officers, such as works manager or superintendent, office 
superintendent, purchasing agent, comptroller, industrial 
secretary, publicity agent, etc. 

Salaries — Clerical. This account should include all the 
clerical labor of the office, including stenographers and 
typewriters. 

Labor — General. This account will include all labor in 
the office which cannot be classified as clerks or officers, 
such as messenger boys, janitors, watchmen, etc. 



26o UNIFIED ACCOUNTING FOR INDUSTRIALS 

Telegraph and Telephone. This account must be made 
to cover all telegraph and telephone expense chargeable to 
the office end of the business, but should not include any 
items which are chargeable to the engineering or manufac- 
turing departments. 

Office Supplies. This account includes all supplies, such 
as stationery, printed forms, books, pencils, etc., required 
for use in the general office. 

Taxes— Corporation. This account will include all cor- 
poration taxes and whatever proportion of other taxes might 
properly belong to the general office, but should not include 
taxes on the factory buildings or personal property, such 
as stock on hand. The general office taxes will appear on 
the sheet as a monthly prorated account. 

Legal Expenses. This account covers everything in con- 
nection with legal work as differentiated from patent work; 
that is, it is to cover all suits, litigations, collections, etc., 
not in any way connected with patents. 

Patent Expenses. This account relates to everything 
in connection with the obtaining and the defense of patents. 
It covers not only the patent fees to the government, but 
also patent attorneys' fees, as well as the cost of all litiga- 
tion of any character whatsoever in connection with patents. 

Royalties. To this account will be charged any and all 
royalties paid for a product and sold by virtue of such pay- 
ment. They are treated as commercial expense lor the 
reason that, while they may theoretically constitute an 
additional cost to an article, they have nothing to do with 
manufacturing operations, either as labor, material, or ex- 
pense. In other words, royalties are never paid for the 
privilege of manufacturing something, but for the privilege 
of selling something on which a profit may be realized, and 
for this reason they rightfully belong to selling expense. 

Freight and Express — Commercial. To this account 



COMMERCIAL OR OFFICE ACCOUNTING 261 

should be charged freight and express chargeable to the 
commercial or office end of the business. This should in- 
clude freight, express, and parcel post charges on goods 
delivered to customers, as the delivery of goods is a com- 
mercial transaction and should not be charged to the manu- 
facturing end of the business. 

Insurance on Stock. This should be charged to the com- 
mercial end of the business, inasmuch as it has nothing to 
do with manufacturing, simply being a warehousing item 
for the benefit of a sales or similar department. 

Interest Paid. This account must be made to include 
interest paid on notes, etc., shown in sundry column on the 
voucher record, also as shown in the sundry column on the 
check record. 

Discount Allowed. This account is intended to cover 
all cash discounts taken by customers in their remittances, 
as entered on incoming cash sheet, and will be the total of 
the ''Discount Sales" column on that sheet. 

Rent. This account is to cover any and all rentals paid 
for floor space for commercial or office purposes. 

Commercial Reserves. This account consists of such 
depreciation items as apply to office furniture, fixtures, 
patents, bad debts, etc. 

Expenses Unclassified. This account is meant to cover 
any and all small items not chargeable to any of the above 
accounts, but which belong to the general commercial end 
of the business. 

Selling Expense 

In all businesses it is well to divide commercial expense 
into two classifications, one covering general commercial 
expense, and the other selling expense which will include 
only such expense as is directly chargeable to the selling 
end of the business as indicated below. 



262 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Salaries — Salesmen. This account should include the 
total amount of salaries paid to salesmen, and must not be 
confused with salaries in connection with clerical or other 
work. 

Labor — General. This account will cover any and all 
labor employed by the sales departments in and around the 
office, factory, warehouse, etc., which is directly under the 
control of the sales department. 

Commission on Sales. To this account should be 
charged all payments to salesmen on commission for making 
sales of goods, as distinguished from those salesmen em- 
ployed on salary. Where a salesman is employed on a 
salary and commission basis, the amount paid must be dis- 
tributed accordingly. 

Traveling. This account will show all expense incurred 
by traveling salesmen, including hotel bills, railroad fares, 
etc., and should be checked and audited from regular sales- 
men's expense account books, or forms of some kind. 

Entertainment. This account is intended to include 
entertainment expense incurred for the purpose of making 
sales, sales contracts, etc., either by the company's officers 
or others. 

Rebates and Allowances. To this account will be 
charged all rebates or other allowances made to customers 
as a matter of sales policy, but it should not include any 
rebates to customers for claims made by them which are 
chargeable to the manufacturing end of the business, such 
as claims for defective material, workmanship, etc. 

Shows and Demonstrations. To this account should be 
charged any expense of shows or demonstrations for the 
purpose of selling goods, provided they are not in any way 
chargeable to regular routine business. This form of ex- 
pense is generally covered by an appropriation of some kind 
and should be checked up accordingly. 



COMMERCIAL OR OFFICE ACCOUNTING 263 

Postage. This account covers postage on mail leaving 
the office relative to making sales, advertising matter, 
catalogues, etc. 

Office Supplies. To this account should be charged all 
items covering general office material chargeable to the 
selling department, such as stationery, forms, pencils, books, 
etc., whether such items are used in the office or by men on 
the road. 

Advertising. Advertising is divided into three classes: 
periodicals, circulars, and catalogues. For distribution pur- 
poses, a charge account should be created for each one of 
these items and the proper amount charged to each of them. 
In connection with circulars and catalogues, it should be 
borne in mind that, if say 100,000 catalogues are purchased 
which might last for a year or more, the expense for them 
should not all be charged up when they are received, but 
they should be brought into an inventory of general stores 
and prorated monthly for a period of one year at least, if 
not two. Many claim that catalogue valuations should 
extend for at least a year beyond the time of complete 
delivery to the public. 

Selling Expense Unclassified. This is simply an account 
containing such small items as are not chargeable to other 
accounts. 

Commercial or Office Expense Credits 

As it is desirable to keep the actual expense separate 
each month from any credits obtained by the commercial 
or office end, it is advisable to keep all interest received and 
discounts earned entirely separate from interest paid and 
discounts allowed. This is done in order that executives 
may see the exact conditions in both respects; therefore, 
separate accounts should be provided in the general ledger 
for these credits, rather than combining them with the 



264 UNIFIED ACCOUNTING FOR INDUSTRIALS 

debits under general heads. The following accounts should 
be provided for their entry: 

Interest Received. This account represents the "Interest 
Received" column of the incoming cash sheet, and should, 
in addition to the usual interest credits, include all interest 
received by the company for any delinquent sales or contract 
accounts. 

Cash Discount Earned. This account, representing the 
discount on purchases as shown on the check record, covers 
all discounts earned by the financial department due to 
discounting accounts payable. 

Credits Unclassified. This account should be carried 
in the general ledger, to include any credit item not provided 
for above or by accounts opened subsequently. 

Analysis of Overhead 

The sum-total of all the accounts in this division in the 
general ledger will be posted to the general account J-2 in 
the private ledger, and will be obtained from the factory 
overhead distribution sheet discussed in Chapter XII. 

Accounts Payable — Personal 

Under this subdivision in the general ledger may appear 
whatever personal accounts it is absolutely necessary to 
carry, and they will go into the corresponding controlling 
accounts in the private ledger if it is found necessary to 
open such accounts. 

Other accounts than those previously specified can be 
opened in the general ledger from time to time as necessity 
may require, but, as before said, the general ledger should 
not be crowded with miscellaneous accounts ; all such items 
should be classified in the voucher record or the journal 
register, as otherwise the analysis of the monthly expendi- 
tures could not be accurately made. 



CHAPTER XIV 

CONTROLLING ACCOUNTS 
NATURE; ASSET ACCOUNTS 

Illustrating and explaining a chart of con- 
trolling accounts, and giving in detail the 
source from which the debits and credits of 
each asset account are obtained. 



i 



CHAPTER XIV 

CONTROLLING ACCOUNTS 

NATURE; ASSET ACCOUNTS 

Purpose of Controlling Accounts 

This and the next chapter set forth in detail the com- 
posifon of all accounts for a private ledger, as per chart 
^t'orm y^_). These accounts are commonly called "Con- 
trollmg Accounts," meaning summary accounts that will 
give the debit or credit balance of the values with which they 
treat entirely independent of the corresponding subsidiary 
current accounts as carried in current ledgers 

For instance, account No. A-3, "Accounts Receiv- 
able (see Form 92), is made up by taking from the sales 
analysis the total sales for the month, and from the incom- 
ing cash sheets the total amount of cash received on ac- 
count from customers for the month, and the balance of the 
account constitutes the amount of outstanding accounts re- 
ceivable. This figure having been obtained, the bookkeeper 
in charge of the customers ledger should draw off his bal- 
ances for comparison. That is to say, he totals each cus- 
tomer s account, adds up the debit balances of all accounts 
any credit balances being deducted, and the figure thus 
obtained must agree with the balance of the controlling 
account. If it does not, there is a mistake somewhere 

For further illustration, what has been said of "Ac- 
counts Receivable," also applies to "General Stores" 
(ti-1). The total of all purchases as taken from the 

267 



268 UNIFIED ACCOUNTING FOR INDUSTRIALS 

voucher record, less the total of all materials which have 
been used or sold as taken from the monthly distribution 
and sales analysis sheets, represents the controlling account 
inventory of general stores. To prove this, the stores 
recorder may be asked to draw off the inventory values of 
balances on hand, as shown on the stores records. Theo- 
retically, these figures must agree, so that here again there 
is absolute control of materials, as information is drawn 
from two independent sources. 

In other words, the balance of any controlling account 
can be checked against a balance obtained from an entirely 
separate source, and in this way an absolute check or con- 
trol of the accounts in question is maintained. 

These private ledger or controlling accounts are ar- 
ranged, as shown on the chart, in such a way that a thirty- 
day statement of the business in its entirety and, by certain 
details, can be easily obtained. Furthermore, this informa- 
tion is in statistical form, thus giving an opportunity to 
read between the lines of figures and make time period com- 
parison of individual items as well as totals, as illustrated 
in Qiapter II. 

In addition, these controlling accounts supply the uni- 
fication required between cost accounting and general ac- 
counting. This is so for the reason that many of these 
accounts are controlling accounts for cost work, particu- 
larly those pertaining to general stores, finished stores, 
work in progress, plant betterments, reserves, deprecia- 
tions, etc. 

Again, these controlling accounts give the same infor- 
mation monthly that older methods of accounting gave but 
once a year; consequently, the adjustments in prices neces- 
sary to keep the business profitable can be m^ade twelve 
times as often as they could under the older methods. The 
value of this is incomparably greater than its cost. 



CONTROLLING ACCOUNTS-NATURE 269 

It will be understood, of course, that the movement in 
a set of controlling accounts is a series of debits and credits, 
and that the charging of any one account with an item of 
any kind, means that some other account must at the same 
time have a credit given it, and this exchange of items by 
debits and credits is so woven together as to form a con- 
tinuous and complete history of the activities, progress, and 
finances of the business. 

Chart of Controlling Accounts 

In order to show the classification required for con- 
trolling accounts, the chart given in Form 92 has been pre- 
pared. On this appear the headings and divisions, "Assets," 
"Liabilities," and "Profit and Loss," and under them the 
various controlling accounts required to distribute these 
primes into the detail necessary for intelligent administra- 
tion. The chart shows by its arrangement how each account 
obtains its number. Each one of these accounts is de- 
scribed in this and the following chapter. The charges and 
credits given under any heading, such as "Accounts Re- 
ceivable," "General Stores," or "Profit and Loss," always 
signify with what that particular account is to be charged 
or credited, indicating in each instance the other account 
involved, which is to be credited or debited as the case 
may be. 

The general divisions for these accounts are indicated 
by letters, each general division then being subdivided by 
numbers. Also, as may be seen by the following illustra- 
tion, this classification is identical with the order of ar- 
rangement on the monthly balance sheet described in Chan- 
ter IL* ^ 



and the following chamerthUh^tr ^nl ?^^^^^^^ accounts discussed in this 

which these forms were ri^S^fJ^^.V ^* J"^ ^-a*^*"- ^*^* *^^* ^^^ businesses from 
being presenf^'lxISly as ' theT werf '^scd ^'' ^" '''^' ^''^'''' ^^^ *-° ^°'^' 



270 UNIFIED ACCOUNTING FOR INDUSTRIALS 



r 

! 



I' 



Assets 

A. Current 

B. Inventory 

C. Investment 



Liabilities 

D. Current 

E. Reserves 

F. Capital, Bonds, and Mort- 

gages 



Profit and Loss 

G. Revenues (by sales) 
H. Costs (of sales) 
J. Expenses 

K. Profit and Loss (monthly 
and general) 

The accounts in a private ledger should be opened in 
the order in which they appear upon the chart, so that a 
trial balance taken from the private ledger can be trans- 
ferred to the monthly balance sheet and profit and loss state- 
ment with the least possible expenditure of time. Any 
other necessary accounts can be placed in their appropriate 
class on the chart. All entries into private ledger accounts 
must be made by journalizing, and all such entries should 
be properly authorized before they are made. 

Classification of Asset Accounts 

Primarily, assets always divide themselves into three 
captions, as illustrated: 

A. Current, which relates almost exclusively to cash 

and accounts receivable. 

B. Inventory, which relates almost exclusively to mov- 

able or convertible assets. 

C. Investments, which relate exclusively to assets that 

are either permanent or are consumed in factory 
operations, such as real estate, machinery, dies, 
jigs, etc. 



CONTROLLING ACCOUNTS-NATURE o*tt 

2/1 

Classification of Liability Accounts 

There are three classes of liabilities, namely: D Cur- 
rent; E. Reserves; and F, Capital, Bonds, and Mortgages 

Current liabilities represent moneys payable in cash 
Within a definite period of time, usually 10 to 90 days 

Reserve accounts are created to protect capital invest- 
ments by crediting these accounts periodically with an 
amount from surplus or profits to provide for the wastage 
shrinkage, or obsolescence of the assets to which they apply 
and debiting them with the actual loss by repairs or replace- 
ments on such assets. In this way the asset accounts always 
show the original purchase or cost price, while the corre- 
sponding reserve account indicates the amount of deprecia- 
tion or wastage. 

Capital, as its name implies, is the amount invested in 
order that a business may be created and conducted, but as 
It IS returnable to the investor under certain prescribed 
condition, it is always a liability. 

Classification of Profit and Loss Accounts 

Monthly Profit and Loss is the final account into which 
go the profits and losses resulting from all monthly trans- 
actions. Its balance is at once transferred to Profit and 
Loss General. Profit and Loss General account establishes 
the dividing line between accounting work and executive 
work. In other words, the Profit and Loss account is the 
final expression of what has been accomplished and this is 
as far as the accountant can go by routine methods. It now 
remains for the executive to say how and by what means 
the results shown by this account shall be disposed of, as 
per the surplus and dividend accounts. 

To arrive at the above, three factors are to be consid- 
ered: VIZ.. revenues, costs, and expenses, as shown on the 
chart. 



272 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Assets — A. Current 

A-1. Cash in Bank 

This account represents the total amount of cash on de- 
posit in all banks. If an account is carried in more than 
one bank, a separate register should be used for each bank. 
All checks should be put up in pad form, and each one given 
a separate number. When a check is spoiled it should be 
marked "Void" and so indicated on the check register. Any 
check so marked must be turned in and filed in its proper 
serial place with other returned checks ; otherwise an audit 
is always questionable. 



Credit 

From check record, with all 
cash paid out in monthly 
totals. 



Charge 

From incoming cash sheets, 
with all cash received in 
monthly totals. 

Note: All cash received from any source whatsoever must 
be deposited. 

The balance of this account represents the total amount 
of cash on deposit at the banks, subject to reconciliation 
with the actual bank balances as shown by pass-books after 
providing for the outstanding checks and undeposited items. 
This balance should be proven at least once a month by the 
use of a "Bank Reconciliation Sheet." 

A- 2. Petty Cash 

This account represents the amount of office cash with 
which to pay petty expenses.* 



CONTROLLING ACCOUNTS-ASSETS 



273 



Credit 

From incoming cash sheets, 
with the amount of cash re- 
ceived back from the petty 
cash fund to decrease the 
account. 



Charge 

From check record, on open- 
ing the account, with the 
definite amount determined 
upon to be carried as petty 
cash. 

From check record, with any 
amount drawn to increase 
permanently the account. 

Note: Checks to reimburse the cashier for these expenditures 
should never be charged to this account, as it always remains con- 
stant unless the fund is purposely increased or decreased. 

The amount of cash in the cash drawer, together with 
any properly proven petty cash vouchers that have not yet 
been redeemed by the general cashier, must at all times be 
equal to the permanent balance of the Petty Cash account. 

A-3. Accounts Receivable 

This account is the controlling account of the customers 
ledgers. Postings are made at the end of each month in 
totals, as follows: 



•S«c discussion of petty cash voucher and disbursements sheet in Chapter XIIL 



Charge 

From sales analysis, with the 
total credit sales for the 
month. 

From journal vouchers, with 
charges against customers, as 
shown by the monthly re- 
capitulations. 

From check record, with any 
amount paid to customers or 
for their accounts. 

From petty cash book with any 
amounts paid to customers or 
for their accounts. 



Credit 

From incoming cash sheets, 
with the total amount of the 
"Accounts Receivable" col- 
umn. 

From journal vouchers, with 
monthly total, as per recapitu- 
lation of notes receivable from 
customers, and all other items 
credited to customers' ac- 
counts not mentioned above. 



274 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



The balance of this account is the outstanding accounts 
receivable, and should be checked against the customers 
ledgers once a month. 

A-4. Accounts Receivable — Past Due 

This account is of great importance as a matter of in- 
formation. If accounts are past due to any great extent, it 
shows either one or all of three things: that collections are 
not being properly cared for, that bad sales are being made, 
or that general financial troubles are affecting collections. 
In some lines of business, accounts past due become interest- 
bearing which is often an item of considerable importance. 

Any concern can determine about what percentage of 
accounts is always legitimately past due and any variations 
from this percentage should be immediately looked into. 
The account is handled as follows: 



Charge 

From journal voucher, with any 
or all accounts which are ac- 
tually past due. 



Credit 

From incoming cash sheets, 
with all amounts received and 
classified under accounts re- 
ceivable past due, as shown 
by the analysis of the sundry 
column. 



The balance of this account is the outstanding accounts 
receivable past due. 



A-^. Accounts Receivable — Consigned 

This account represents the amount of outstanding 
claims on goods which have been sent out on consignment. 
In other words, B-5, Finished Stores (Branches), would 
cover any and all goods sent out on consignment, while 
account A-5 represents the sales which have been made on 
these goods. This account is one that in many lines of busi- 



CONTROLLING ACCOUNTS-ASSETS 275 

ness must be watched very carefully as defalcation has 
probably been made more often through it than in any 
other phase of business. Accounts Receivable-Con- 
signed should be carried as follows: 



Charge 

From journal voucher, with all 
sales of consigned goods. 



Credit 

From incoming cash sheets, 
with all amounts received in 
cash for accounts receivable 
(consigned) as shown by an- 
alysis of the sundry column. 

The balance of this account is the outstanding accounts 
receivable on goods consigned, and the aggregate balance 
of the consignment customers ledger must agree with this 
balance and must be proven once a month. 

A-6. Accounts Receivable— Suspense 

This account should be carefully analyzed. Too often 
unfortunately, it has been abused by carrying in it accounts 
that have long been dead and past any possible collection. 
1 his, of course, creates fictitious assets. 

Accounts Receivable— Suspense should be charged, and 
Accounts Receivable credited, with all accounts doubtful 
enoiigh to justify the transfer. But it must be borne in 
mind that, at the same time, the individual account in the 
customers ledger must be transferred to a subsidiary sus- 
pense account in that ledger, using a separate sheet for the 
same. Each suspense account should be put on one line 
and all these items should appear together on one or tv^ 
pages. 

Accounts which are finally found uncollectible should 
be credited to this suspense account and charged to reserve 
for bad debts; therefore, the construction for a balance is 
as follows: 



2^6 UNIFIED ACCOUNTING FOR INDUSTRIALS 



Charge 
From journal voucher, with ac- 
counts which are not actually 
bad though of problematical 
value. 



Credit 
From journal voucher, with all 
accounts determined to be ab- 
solutely uncollectible. 
From incoming cash sheets, with 
all amounts received in cash 
for accounts receivable (sus- 
pense), as shown by analysis 
of the sundry column. 

The balance of this account represents the actual amount 
in suspense and should be proven at least once a month. 

A-7. Notes Receivable 

In handling this account, it should always be borne in 
mind that if notes receivable are discounted, the full amount 
of the note must be entered in the "Notes Receivable col- 
umn on the incoming cash sheets and the discount on such 
notes in the "Sundry" column on the charge side (see torm 
85) If notes receivable are held for payment, however, 
the amount of cash received in payment of the note must be 
credited in "Notes Receivable" column, and mterest re- 
ceived on these notes credited in the "Interest Received 
column on the incoming cash sheet. This account always 
represents the total amount of notes receivable and is con- 
structed as follows: 



Charge 
From journal or notes receiv- 
able book, with all notes re- 
ceived from customers. 



Credit 

From incoming cash sheets, 
with all notes receivable paid 
during the month. 

From journal voucher, with the 
notes receivable not paid at 
maturity. The amount of 
such notes, plus interest ac- 
crued, is then charged to the 
persons from whom the notes 
were originally received. 



CONTROLLING ACCOUNTS-ASSETS 

277 

The balance of this account should agree with the 
amount of notes on hand and should be proven once a 
month. 

A-8. Advanced Expense— Insurance 

This is only another name for what is commonly termed 
unexpired msurance. One account may cover all classes of 
insurance paid, or it may be divided into different accounts 
as fire msurance, liability insurance, compensation insur- 
ant, foreign insurance, etc. It is shown here only as a 

Advanced expense (insurance) is an expense which 
cannot be charged into any one month. In other words 
.f msurance is paid for twelve months in advance, it must 
be prorated over the twelve months for which it is paid 
Insurance accounts could, of course, be charged into a gen- 
era advanced expense account, covering many expenses 
that cannot be charged into any one month but must be pro- 
rated oyer a considerable period of time. Where this is 
done, all items should be carefully scheduled in an advanced 
expense prorating book, thus showing the monthly amount 
of each class. 

follott^""*^ Expense-Insurance account is carried as 



^'""'i^ Credit 

fori rane „ aTJce' T °"h°" °^ J"^"^ ^'^"^"-^ 

in advance. for each month, as per sched- 

ule of advanced expense pro- 
rating sheets. 

s«r,I?' ''^'^"? "! ^^'' ^''°""' '^'''^' *^ amount of in- 
lyprorltbr "^^'^'^^^' '° subsequent periods by month- 



278 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



A-9. Advanced Expense — Advertising 

There is probably no account under assets more debated 
and perhaps more debatable than this, for the reason that 
the time period value of advertising can never be anything 
but an estimate. Expenditures of this kind come usually 
in large pa)mients in some particular month. For instance, 
invoices may be received and paid in some one month for 
$10,000 worth of catalogues; this does not, however, meaii 
that the expenses for these catalogues should be charged 
up to that particular month. On the contrary, they may 
constitute a year's supply and should be prorated, by months, 
as with insurance. This principle can properly be applied, 
to certain forms of trade journal and periodical advertising, 
the cost of which should be spread over a certain period. 

Advanced Expense — Advertising account is handled as 
follows: 



Charge 

From voucher record, with the 
total amount of money paid 
out for advertising of any- 
kind, as per analysis of sundry 
column. 



Credit 

From journal voucher, with the 
monthly proportion of these 
expenses, as per schedule of 
advanced expense prorating 
sheets. 



The balance of this account shows the amount of ad- 
vanced expense (advertising) properly chargeable to sub- 
sequent periods by monthly proratings and should frequently 
be checked against the balance shown on the prorating 
sheets. 

A-10. Advanced Expense — Salesmen 

This account is practically of the same nature as account 
A-9, ,and represents an amount of money charged out 
which is as yet undistributed and which must come back 



CONTROLLING ACCOUNTS-ASSETS 



279 



on vouchers for traveling expenses. When these vouchers 
come in, their amounts will be distributed to commercial 
expense, as shown under commercial expense analysis 
(Chapter XIII). 

This account is to be handled as follows: 



Charge 

From voucher record, with the 
total amount chargeable to 
this account as per analysis of 
sundry column. 



Credit 

From journal voucher, with the 
monthly charge to expense or 
to the salary account of 
salesmen. 



The balance of this account shows the amount of money 
advanced for expenses and still in the hands of salesmen. 

A— 11. Treasury Bonds 

In connection with this account, it must be distinctly 
understood that treasury bonds are those that have once 
been issued but later taken back into the company's 
possession, either for cash or for liquidation of a debt, 
and that the term does not, in any way, designate unissued 
bonds. The account is to be handled as follows: 



Charge 

From journal voucher, with any 
bonds received in payment of 
goods or other indebtedness. 

From voucher record, with any 
money paid for bonds as per 
sundry column analysis. 



Credit 

From incoming cash sheets, 
with any cash received from 
the sale of treasury bonds. 



The balance of this account represents the value of the 
treasury bonds on hand. 

A-12. Treasury Stock—Preferred 

As in the case of bonds, treasury stock is that which has 



28o UNIFIED ACCOUNTING FOR INDUSTRIALS 

been issued and then taken back into the company's pos- 
session. The term does not, in any way, refer to unissued 
stock. The Treasury Stock — Preferred account is to be 
handled as follows: 



Credit 

From incoming cash sheets, 
with any cash received for 
the sale of treasury preferred 
stock. 



Charge 

From journal voucher, with any- 
preferred stock received in 
payment of goods or in- 
debtedness. 

From voucher record, with any 
amount paid for preferred 
stock as per sundry column 
analysis. 



The balance of this account represents the value of pre- 
ferred treasury stock remaining unsold. 

A— 13. Treasury Stock — Common 

As already stated, treasury stock is that which has once 
been issued and then taken back into the company's posses- 
sion, either as a donation, or for cash, or for liquidation of 
some debt. The account is to be handled in the same man- 
ner as A-12, "Treasury Stock — Preferred," discussed 
above. 

The balance of this accotmt represents the value of each 
treasury stock remaining unsold. 

A— 14. Labor 

This account represents the total amount of any and all 
labor employed by the company and must include all wages 
and salaries. The total of this account is to be obtained from 
two different sources, as indicated below, and can at any 
time be checked against the time sheets, thus affording a 
method for making a monthly audit of all money paid out 
for labor. 



CONTROLLING ACCOUNTS-ASSETS 



281 



Charge 

From voucher record, sundry 

column, with monthly total of 

all labor paid for. 
From petty cash disbursements 

sheet, with monthly total of 

the labor column. 



Credit 



From record of production, bet- 
terment, and repair orders, 
with total of column 4 (Form 
78). 

From factory overhead sheet, 
with total of labor column 
(Form 77). 

From commercial expense dis- 
tribution sheet, with totals of 
columns 1, 2, 3, 17, and 18 
(Form 91). 



Note: The above method requires that a voucher be drawn 
for each pay-roll made up, thus showing the authorization and 
approval of the same. 

All salaries paid by check should be handled in the same way, 
as full authorization for the payment of labor can be obtained in 
no other way. 

If a company pays its employees two or four times a 
month, this account must naturally balance out ; if, on the 
other hand, it pays weekly, an "Accounts Payable Pay-roll" 
must be opened under "Liabilities" in order to show a bal- 
ance on unpaid labor at the end of the month. 

Assets — B. Inventory 

As stated in connection with stores-keeping, no matter 
what the nature of a purchase is, it must first pass into 
general stores and be issued from general stores to some 
order number by means of a requisition. 

It is only by taking everything into general stores and 
by the use of a production, betterment, repair, or distribu- 
tion order, to transfer the item to some other form of in- 
ventory, that valuations are maintained through all the uses 
to which materials, tools, etc., may be put. 



282 UNIFIED ACCOUNTING FOR INDUSTRIALS 

B— 1. General Stores 

General stores is a controlling account for such items 
as go to general stores, the balance of which is obtained 
as follows: 



Charge 

On opening the account with 
the value of general stores, as 
shown on the general stores 
record. 

From voucher record, with 
monthly total of "General 
Stores" column. 

From production, betterment, 
and repair order record, with 
monthly total of items made 
for general stores, as per 
sundry column. 



Credit 

From production, betterment, 
and repair order distribution 
sheet, with monthly total of 
column 2 (Form 78). 

From commercial expense dis- 
tribution sheet, with monthly 
total of columns 5 and 25 
(Form 91). 

From factory overhead sheet, 
with monthly total of column 
2 (Form 77). 

From sales analysis sheets, with 
total of general stores sold. 



Note: An invoice or a sales slip must be obtained for each 
and every item of material purchased. 

The balance of this account represents the inventory 
of general stores and must be made to agree with any 
physical inventory when it is taken, the difference, if any, 
being carried to the Profit and Loss account. The balance 
of this account can also be reconciled monthly with the 
inventory values of ''Balances on Hand" as shown on the 
stores record kept by the stores recorder. 

B— 2. Work in Progress 

It is a well-recognized fact that, to obtain a thirty days' 
statement in any business on a perpetual inventory basis, 
it is absolutely necessary to create a controlling account 
called "Work in Progress" which shall be the holding 
account for all work being done of a productive or asset 



CONTROLLING ACCOUNTS-ASSETS 



283 



increasing nature. This has been described very fully in 
Chapter IV under ''Stores-Keeping" and need not be dis- 
cussed in detail here other than to say that, to cover this 
account completely is one of the principal functions of the 
record of production, betterment, and repair orders (Form 
78), On this record are gathered all orders covering work 
relative to production and betterments for the month, and 
these orders are recapitulated under proper columns by 
production orders horizontally and by totals vertically. 

The composition of the Work in Progress account 
should be as follows: 



Charge 

On opening the account, with 
the present value of produc- 
tion and betterment orders. 

From production, betterment, 
and repair order sheet, with 
total of columns 2, 3, 4, and 
5, by items (Form 78). 



Credit 
From production, betterment, 
and repair order sheet, with 
total of columns 8, 9, and 
10, by items. 



Note: While the production, betterment, and repair order 
sheet is used for collecting repair orders, so as to classify them in 
totals for accounting purposes in connection with depreciation, 
it should be understood that repair work does not form a part of 
"Work in Progress." These orders are taken care of through 
Depreciation" and ultimately become a part of the overhead. 
For this reason they should not be totalled into the "Work in 
Progress" account. 

The balance of this account represents the inventory 
of work in progress, and should be shown in the total of 
column 7 on the production, betterment, and repair order 
sheet. It should be borne in mind that, in handling this 
sheet, all uncompleted production and betterment orders, 
closed into "Unfinished Work in Progress," column 7, are 
transferred to column 1 of the sheet for the next month. 



284 UNIFIED ACCOUNTING FOR INDUSTRIALS 

These orders constitute the previous value of work in 
progress, hence overhead expense must be prorated to 
them, the same as though they were completed orders; 
otherwise a correct inventory could not be obtained and 
the overhead expense for the month could not be absorbed 
into inventories as it should be. 

B— 3. Component Stores 

This account is a controlling account, as described in 
Chapter IV, under "Stores-Keeping," the debits and 
credits for which are as follows: 



CONTROLLING ACCOUNTS-ASSETS 



Credit 

From monthly production, bet- 
terment, and repair order 
sheet, with the total disburse- 
ments of component stores to 
production orders, as shown 
imder column 3. 



Charge 

On opening the account, with 
the present value of com- 
ponent stores. 

From monthly record sheet of 
production and betterment or- 
ders, with all completed com- 
ponent stores as credited to 
monthly work in progress and 
shown under column 8 (Form 
78). 

The balance of this account represents the book in- 
ventory of component stores. 

B— 4. Finished Stores 

This is a controlling account of all such stores as are 
available for merchandising under whatever classification 
they may exist, by models, etc. It should be handled as 
follows: 



Charge 
On opening the account, with 
the inventory value of pres- 
ent finished stores. 



Credit 

From sales analysis sheet, with 

total sales of finished stores. 

From monthly distribution of 



285 



From production, betterment, 
and repair order sheet, with 
all finished stores completed 
as credited to "Work in 
Progress" and chargeable to 
"Finished Stores," as shown 
under column 9 (Form 78). 

From sales analysis sheets, with 
all finished stores returned by 
customers and placed in stock. 



production, betterment, and 
repair orders, with any fin- 
ished stores used in produc- 
tion. (This seldom occurs, 
but when it does, the finished 
stores item must be placed in 
the same column as com- 
ponent stores and the entry 
made in red ink to distinguish 
it from component stores.) 



The balance of this account represents the book in- 
ventory of finished stores. 

B-5. Finished Stores (Branches) 

There are very few concerns which have branch stores 
in which they carry stock. However, where this is done, 
the amount of finished stores on hand in branches is 
obtained by crediting finished stores at the factory and 
charging branches. 

B-6. Shop Stores 

This is a holding account to prevent any discrepancy 
m inventory valuations when taking a physical inventory. 
In other words, these are supplies issued from general 
stores and charged up to expense but held in sub-stores 
stations for the convenience of the factory. Unless a 
holding account of this kind is provided, on taking a 
physical inventory, a considerable sum that had already 
been charged up to expense, might be recorded, whereas 
by keeping this account for shop stores at some fixed sum, 
subject to adjustment under Profit and Loss, such an error 
will be avoided, and at the same time opportunity will be 
given to find to what extent these stores are being used. 
Therefore, an adjustment from shop stores bin cards (used 
simply to show "Received," "Given out,'' and "Balance") 



286 UNIFIED ACCOUNTING FOR INDUSTRIALS 

should be made on this account at least once every three 
months. 

The account will be opened as a stores account, and 
debited with the value as shown by the quantity on the bin 
cards of shop stores. This account will be increased or 
decreased by an adjustment in profit and loss from time 
to time. 

The balance of this account represents a certain 
fixed investment in stores that have been issued but not 
used. 

Assets — C. Investments 

Attention is called to the fact that the following ac- 
counts have to do with money which is absolutely tied up 
in the business, that is, fixed investments, the nature of 
which is such that no "turnover" can be applied to them; 
whereas all of the preceding accounts under A and B deal 
with assets which are subject to contraction and expansion 
according to trade conditions. In other words, all of the 
assets under A and B are readily convertible and are so 
considered by banks and other financial institutions, while 
those under C are assets that are of a peculiar value to the 
individual business, but are not readily convertible, and 
are subject to a heavy shrinkage in case of a forced sale. 
Therefore, in order to protect money tied up in invest- 
ments, there has to be established a reserve or depreciation 
fund which by some method of accounting must be worked 
into costs of production. To arrive at this, two ways are 
open: 

1. A rent charge which shall become a part of the 
overhead expense and out of which deprecia- 
tions on the buildings and real estate invest- 
ments are taken care of; or 



2. 



CONTROLLING ACCOUNTS-ASSETS 287 

A method of depreciation, on a percentage basis 
the amount of which shall be charged directly 
mto overhead. 



Generally speaking, the second plan is preferable. 
It IS, however, to be borne in mind, that the original in- 
vestments m buildings, building equipment, and machinery 
should never be lessened in the controlling accounts, as 
decreases are entirely taken care of by depreciation ac- 
counts. Real estate does not come under this rule as 
appreciation might take place and is then entered directly 
on the controlling account, as shown under the next head- 
ing. Further, this method of procedure is quite necessary 
m connection with replacement and insurance values In 
other words, the balance of this account should always be 
equal to the original inventory or purchase values, and be 
protected by a reserve for depreciation; otherwise invested 
capital would be consumed by dividends not earned 

Another point to which very careful consideration 
should be given, is that, whatever the total expense of the 
business may be, it must always come out of the profits- 
therefore, the cost system, or system of distribution must 
provide for the absorption of the expenses into its cost of 
production. Hence, in connection with all accounts under 
Investment," wasting of invested capital must be pro- 
tected by reserves which must be prorated into costs each 
month. In other words, depreciations on original fixed 
investments must be taken into account before legitimate 
profits are available in dividends to the stockholders of the 
company. 

C— 1. Real Estate 

The treatment of this account under "Investment" is 
as follows: 



'I 

ill 



lii.M 



288 UNIFIED ACCOUNTING FOR INDUSTRIALS 



Credit 

In case of any sale, the account 
is credited with the book value 
of the real estate sold, while 
the excess of selling price 
over book value is credited to 
Profit and Loss. 



Charge 

On opening the account, with 
the present book or appraised 
value of all real estate. If 
appreciations on surrounding 
real estate have been very- 
pronounced within a recent 
period, the company's prop- 
erty should be re-appraised 
and adjusted accordingly. 
This is very necessary when 
property is to be covered by 
a mortgage. 

From check register, with the 
amount of any check in pay- 
ment for real estate. 

From journal voucher, with all 
notes or mortgages given in 
payment for real estate. 



The balance of this account is the cost or appraised 
value, as the case may be, of real estate owned. 

It is held by many authorities that an increase in land 
value should not be shown as such on the books. How- 
ever, there would seem to be no good reason why land 
should not be treated in the same manner as any other 
commodity. In all of the other transactions of a business 
inventory valuations fluctuate according to given condi- 
tions. For instance, by using the last purchase price on 
materials, which is the exact replacement value of 
the material, we change the valuations up or down of 
all the materials on hand. The same applies to the price 
on finished parts; the last regular production order cost 
being used for all inventory and cost valuations made, thus 
increasing or decreasing the valuation of all such assets 
on hand. These things are all arrived at from practical 
experience in trying to operate a business on a reasonable 



CONTROLLING ACCOUNTS— ASSETS 



289 



and efficient basis, conserving in all instances valuations 
on assets. As stated before, changes in land value, if based 
on bona fide appraisals, should be treated in an identical 
manner. 

C-2. Buildings 

In the case of buildings it is necessary to consider a 
fixed depreciation; therefore, the treatment of the Builds 
ings account would be as follows: 



Charge 

On opening the account, with 
present book value of build- 
ings. If there is any question 
about their value, they should 
be appraised by a committee 
or appraisal company. 

From record of production and 
betterment orders, with the 
amount of any betterments to 
buildings. (This does not in- 
clude repairs.) 



Credit 
From incoming cash sheet 
(Form 85), with any amount 
received in payment or build- 
ings sold, as per analysis of 
sundry column. 
From journal voucher, with the 
difference between the selling 
price and the original cost of 
any betterments to buildings 
when these are sold, this dif- 
ference naturally representing 
a loss. 

Note: Whenever contract work is done on buildings, cither 
new or old, the cost should be charged to General Stores and then 
be drawn out on a betterment order and charged to Buildings 
account. 

The balance of this account shows the original cost 
of buildings together with any subsequent increase in 
value from betterments. The current estimated value is 
the difference between the balance of this account and the 
balance of E-2, ^'Reserve for Buildings." 

C— 3. Building Equipment 

This account should consist of such items as are in 
reality a part of the buildings, and are not used directly 



I II 



290 UNIFIED ACCOUNTING FOR INDUSTRIALS 

for manufacturing or processing purposes, such as eleva- 
tors, plumbing, steam fittings, electric light and power 
wiring, gas fittings, sprinkler system, etc. These are dis- 
tinguished from the building proper, largely because they 
are subject to a much more rapid depreciation than is the 
building itself; for instance, it might not be necessary to 
write off more than 2% on the buildings, while on the 
items above mentioned, 5% to 10% per annum might be 
required. 

The handling of Building Equipment account is as 
follows : 



Credit 

From incoming cash sheets, 
with any amount received in 
payment for building equip- 
ment sold. 

From journal voucher, v^^ith the 
difference between selling 
price when sold and the origi- 
nal cost. 



Charge 

On opening the account, with 
the present book values of this 
equipment. If this value is 
not available, an appraisal 
should be made. 

From monthly betterment order 
record, with all completed 
plant betterments chargeable 
to building equipment. This 
must include all contract 
work which should be passed 
through stores and requisi- 
tioned out as betterment ma- 
terial, so that all betterments 
to building equipment will 
make themselves manifest on 
the monthly betterment order 
record. 



The balance of this* account shows the original cost of 
building equipment, together with any subsequent in- 
crease from betterments; the current value being the dif- 
ference between the balance of this account and the bal- 
ance of E-3, "Reserve fon Building Equipment." 



CONTROLLING ACCOUNTS-ASSETS 

291 

C-4. Office Furniture and Equipment 

.oul^llnrT '°'"' '""''"'■^ °' ^" '^■"<^^' ^"d office 
uZsoiVr T '^P^""'^--^' adding machines, etc. As 
Items of this nature must pass into general stores when 
purchased, no distribution of any kinf will be charged o 

tem'nrL T'k ^'^ ™"^''" ^^^°^^'- *herefore'thes: 
taTnst 1 I " "-^q^'^itioned out and distributed 

against some betterment order number. The account 
must be handled as follows: account 






Charge 

On opening the account, with 
the present book value of of- 
fice furniture and equipment. 
If this is not available, they 
must be inventoried. 

From monthly betterment order 
record, with all completed 
plant betterments chargeable 
to office furniture and equip- 
ment. 



Credit 

From incoming cash sheets, with 
all cash received in payment 
for office furniture and equip- 
ment sold, as per analysis of 
sundry column. 
From journal voucher, with the 
difference between the selling 
price and the original cost of 
any office furniture and equip- 
ment plus any betterments 
when sold. 

The balance of this account shows the original cost of 
office furn,ture and equipment together with any subst 
quen mcrease in value for betterments. The current e^t 

for Offi ^fthis account and the balance of E-4, "Reserve 
tor Office Furniture and Equipment." 

C-5. Machinery and Tools 

This account represents the value of all the machinery 
and shop equipment in the plant, except the power and 

are parts of, a machine, but does not include dies lies 
fixtures, and gages, or any items that go into miscelllne: 



|!. 



'Ill 



292 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



ous equipment, as these are provided for in separate ac- 
counts. All items covered by this account must be 
purchased and passed into general stores and then drawn 
into the factory by a proper betterment order; therefore, 
no direct charges from the voucher record are permissible. 
This account will be handled as follows: 



Charge 

On opening the account, with 
the present book value of ma- 
chinery and tools. If not 
available, then appraisal must 
be made. 

From monthly betterment order 
record, with all completed 
plant betterments chargeable 
to machinery. 



Credit 

From incoming cash sheets, 
with any amount received in 
payment for machinery sold 
as per analysis of sundry 
column. 

From journal voucher, with the 
difference between selling 
price and the original cost of 
any machinery or tools plus 
any betterments added thereto 
when sold. 



r- 



The balance of this account is the original cost of 
machinery and tools together with subsequent increase in 
value from betterments. The current estimated value at 
any time is the difference between the balance of this 
account and the balance of E-5, "Reserve for Machinery 
and Tools." 



Special Account— Power and Light Equipment 

While no special account is showm on the chart or bal- 
ance sheet, it is quite necessary sometimes to separate the 
investments in a power and Hght plant from the invest- 
ment in the rest of the plant, inasmuch as it is a special 
service feature which may be utilized by more than one 
plant. In other words, it is a producing factor which, if 
properly handled, would have costs computed on an inde- 
pendent basis and its product sold to the parent plant, and 



CONTROLLING ACCOUNTS-ASSETS 

to others if it furnished service to them. Therefore, it may 
be desirable to have an account controlling the investment 
in all such items of power and light equipment, as engines, 
boilers, pumps, tanks, generators, air compressors, etc. 

Like all other things, items of this nature must be pur- 
chased and put in general stores and not be distributed 
from any voucher record. It is suggested that this ac- 
count always be handled in total and in the following 
manner; 



Charge 

On opening the account, with 
the present book value of 
power and light equipment. 
If not available, an appraisal 
must be made. 

From monthly betterment order 
record, with all completed bet- 
terments chargeable to power 
and light equipment. 



Credit 

From incoming cash sheets, 
with any amount received in 
payment for power and light 
equipment sold. 

From journal voucher, with the 
difference between the selling 
price and the original cost of 
power and light equipment 
plus any betterments when 
sold. 



The balance of this account shows the original cost of 
power and light equipment together with any increase in 
value from betterments. The current estimated value at 
any time will be the difference between the balance of this 
account and the balance of ''Reserve for Power and Light 
Equipment." 

C— 6. Dies, Jigs and Fixtures 

Particular consideration should be given to this ac- 
count, as it often represents values of a temporary nature. 
In other words, it represents an investment in many tools, 
which should not be written off to expense immediately 
upon their purchase, or completion, but which must be 
retired by what is known as a rapid depreciation fund 



I'l 



m 



294 UNIFIED ACCOUNTING FOR INDUSTRIALS 

amounting to anywhere from 20% to 100% per annum. 
This sort of equipment must be sharply distinguished from 
small tools, such as drills, reamers, and cutting tools (ex- 
cepting perhaps large milling cutters), which are bought 
and put into general stores and are immediately written 
into expense as soon as issued to the factory. 
This account should be handled as follows: 



CONTROLLING ACCOUNTS-ASSETS 



295 



Charge 

On opening the account, with 
present book value of all dies, 
jigs, and fixtures in use. 

From monthly betterment order 
record, with all completed bet- 
terments, in the form of jigs, 
fixtures, etc. 



Credit 

From journal voucher, with the 
initial cost of these items 
when they become absolutely 
worthless or are discarded. 

From incoming cash sheets, 
with any sales made of the 
same. 



Note: This investment account will always be increased from 
B-2, "Work in Progress"; therefore, it calls for a betterment order 
or some special form of betterment requisition. 

The balance of this account should show the original 
cost of these items together with any subsequent increase 
in value from betterments. The current value at any time 
is the difference between the balance of this account and 
the balance of account E-6, "Reserve for Dies, Jigs, and 
Fixtures." 

C— 7. Shop Fixtures and Fittings 

This account will represent the value of all shop fix- 
tures and fittings, such as benches, cupboards, chairs, 
desks, together with all containing racks for stores-keep- 
ing, for tool cribs, etc. All items of this nature which are 
bought for the factory must first pass through general 
stores, being issued to the factory by betterment orders. 
The account will be handled as follows: 



Charge 
On opening the account, with 

the present book value of shop 

fixtures and fittings. 
From monthly betterment order 

record, with all monthly plant 

betterment orders chargeable 

to these items. 



Credit 



From incoming cash sheets, 
with any amount received in 
payment for shop fixtures and 
fittings as per analysis of 
sundry column. 
From journal voucher, with the 
difiference between the selling 
price and the original cost of 
any shop fixtures and fittings 
plus any betterments when 
sold. 

From journal voucher, with the 
initial cost of any item when 
it becomes obsolete. 

The balance of this account shows original cost of shop 
fixtures and fittings together with any subsequent increase 
in value from betterments. The current estimated value 
at any time is the difference between the balance of this 
account and the balance of E-7, ^'Reserve for Shop Fix- 
tures and Fittings.*' 

C— 8. Miscellaneous Equipment 

This is an investment account of a peculiar nature and 
one not subject to depreciation; therefore, no reserves 
are set up for it. It takes so much water to fill a siphon 
before it will operate and deliver water at the discharge 
end. With a given output and a given number of people 
employed, it takes just so much miscellaneous equipment 
to operate a plant. This miscellaneous equipment consists 
of such things as hammers, wrenches, twist drills, reamers, 
dies, taps, etc., and also brooms, pails, buckets, small 
trucks, tote boxes, etc. Assets of this nature are always re- 
covered by the taking of a physical inventory; therefore, 
a holding account of this inventory must be maintained in 
order to preserve an equilibrium on inventory valuations 






£• I J 



lis 



296 UNIFIED ACCOUNTING FOR INDUSTRIALS 

at the termination of the fiscal year. This account repre- 
sents a standing inventory and is not affected during the 
year by any increase or decrease of items. 



Charge 

On opening the account, with 
the present book value of 
miscellaneous equipment. 

From journal voucher, with any 
increase in this equipment as 
shown by physical inventory 
from year to year. 



Credit 

From incoming cash received 
sheets, with any amount re- 
ceived in payment for miscel- 
laneous equipment as per 
analysis of sundry column. 

From journal voucher, with any 
decrease in the amount of this 
equipment at subsequent in- 
ventory periods. 

The balance of this account gives the cost of miscel- 
laneous equipment as affected by any increases or de- 
creases shown by subsequent inventories or sales. 

C-9. Patterns 

This account represents the value of patterns on hand 
at any time and should be handled conservatively, for it is 
a well-known fact that changes made in patterns are so 
rapid in most instances as to cause them to become worth- 
less. These items must be handled through a controlling 
account, and written off on a fixed basis rather than to 
charge them up to expense at the time they are created. 
In other words, these items are distributed over some time 
period or on some fixed basis for the purpose of stabilizing 
costs. The account will be handled as follows: 



Charge 

On opening the account, with 

the present book value of 

patterns. 
From monthly betterment order 

record, with all completed 

betterments for same. 



Credit 

From journal voucher, with ini- 
tial cost of discarded patterns. 

From incoming cash sheets, 
with any amount received in 
payment for patterns as per 
analysis of sundry column. 



CONTROLLING ACCOUNTS-ASSETS 

297 

The balance of this account shows total initial cost of 
patterns, the current estimated value at any time being 
the difference between the balance of this account and the 
balance of E-8, "Reserve for Patterns." 

C— 10. Drawings 

This account represents the value of drawings on hand 
at any time. All that was stated above in regard to pat- 
terns applies with equal or greater force to drawings 
and the account is handled in the same way as Patterns 
account. 

The balance of this account shows total initial cost of 
drawings, the current estimated value at any time being 
the diflference between the balance of this account and the 
balance of E-9, "Reserve for Drawings." 

C-11. Patents 

There is perhaps no account on the general books of 
any company that is more questionable than that of 
patents. Their true worth is an absolutely unknown 
quantity, and tremendously fictitious values are often 
placed upon them to the ultimate detriment of the com- 
pany s affairs. This account is handled as follows- 



Charge 

From voucher record, with 
actual cost to obtain patent as 
per sundry column which 
should include all legal ex- 
penses as well as patent fees. 

From journal voucher, with the 
actual cost or estimated value 
of a patent which is pur- 
chased. 



Credit 

From journal voucher, with the 
original book value of any 
patent which has expired or 
has been abandoned. 

From incoming cash sheet, with 
any amount received in pay- 
ment for patents which are 
sold instead of being aban- 
doned, as per sundry column. 



nf J?' ^^^u"^ ""^ ^^'' ^""^""^ '^^^' ^^^ t^tal initial cost 
01 patents, the current estimated value at any time being 



;i| 



H 



298 UNIFIED ACCOUNTING FOR INDUSTRIALS 

the difference between the balance of this account and the 
balance of E-10, "Reserve for Patents." 

C-12. Advanced Expenses — Development and Experi- 
mental Work 

In many lines of business a controlling account is 
necessary to cover what may be termed ''Advanced Ex- 
penses" for development and experimental work. This 
account, when required, is purely an arbitrary one, dictated 
by conservatism for the purpose of stabilizing costs. In 
other words, the cost of development and experimental 
work for a product is held in this controlling account and 
spread over the life, or a portion of the life, of the product. 
This account oftentimes includes research work, especially 
of a laboratory nature. 

By having an account of this character, it is possible 
to prorate monthly a certain amount for this kind of work, 
thereby putting it on the same basis as unexpired insur- 
ance, advertising, etc. 

The account is handled as follows: 



Charge 

On opening the account, with 
any undistributed expense of 
this character. 

From monthly betterment order 
record or a prorating sheet, 
with all expense chargeable to 
this kind of work. 



Credit 

From journal voucher, with the 
proper monthly distribution 
which should be charged 
directly into overhead or 
commercial expense as shown 
on the monthly prorating 
sheets. 



The balance of this account is the amount to be pro- 
rated to subsequent time periods. The time period and 
the amount absorbed into expense for each period may be 
changed from time to time as necessary, but only by au- 
thority of the board of directors or executive committee. 



f : 



CHAPTER XV 

CONTROLLING ACCOUNTS 

LIABILITY AND 

PROFIT AND LOSS ACCOUNTS 

Continuing the illustration and explanation 
of the chart of controlling accounts, and 
giving in detail the source from which the 
debits and credits of each liability account 
and each profit and loss account are obtained. 



« i 



CHAPTER XV 



CONTROLLING ACCOUNTS 

LIABILITY AND 

PROFIT AND LOSS ACCOUNTS 

Liabilities — D. Current 

D-l. Accounts Payable 

This is the controlling account of the purchase ledger 
or purchase vouchers. In other words, it represents the 
total amount of money which the company owes its 
creditors. Postings are made to this account at the end 
of each month as follows: 



Charge 

From check record, with month- 
ly total of the "Accounts 
Payable" column. 

From journal voucher, with any 
other items charged to pur- 
chase creditors, such as notes 
issued in payment, etc. 



Credit 

From voucher record, with 
monthly total of all purchases, 
as per "Accounts Payable" 
column. 

From journal voucher, with any 
other items credited to pur- 
chase creditors. 

From incoming cash sheet, with 
all cash received from pur- 
chase creditors, as per analy- 
sis of sundry column. 

The balance of this account is the amount due pur- 
chase creditors. The aggregate balance of the purchase 
vouchers must agree with this balance which should be 
proven once a month by drawing off the balance from the 
unpaid vouchers. 

301 



302 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



..■J I 



I'l 



D-2. Accounts Payable Datings 

This is a very unusual account with most concerns and 
for this reason is not given on the chart (Form 92). It 
represents purchases under special agreements, where the 
invoice does not mature in thirty or sixty days as custom- 
ary, but at a later date specifically indicated in the pur- 
chase contract. 

D-3. Notes Payable 

This account s'hows the company's liability for notes 
payable, and should be handled as follows: 



Charge 

From check record, with all 
payments on account of notes 
payable, as per "Notes Pay- 
able" column. 

From journal voucher, with any 
adjustments chargeable to 
notes payable by other than 
cash, as per monthly total of 
the "Notes Payable" column. 



Credit 

From incoming cash sheets, 
with monthly total of the 
"Notes Payable" column, rep- 
resenting all notes payable 
issued, discounted, and re- 
newed. 

From journal voucher, with all 
renewals of notes by other 
than cash transactions, as per 
the monthly total of "Notes 
Payable" column. 



Note: Upon the renewal of a note, a journal voucher must be 
made on which will be recorded the cancellation of the unpaid note 
or any portion thereof by the issue of a new note in its place. The 
amount of the old and new note will be charged and credited to this 
account, respectively. In the event of the new note being in excess 
of the old one, the excess, representing interest or a further pay- 
ment to a purchase creditor, must be charged and credited to the 
proper account 

The balance of this account represents the amount of 
the company's liabilities for notes payable, and must agree 
with the total of unpaid notes still outstanding. It should 
be proven at least once a month against the unpaid notes. 



CONTROLLING ACCOUNTS-LIABILITIES 303 

D-4. Taxes Accrued 

In the handling of this account, it must be remembered 
that taxes are usually paid at the end of the year. As it 
is not desirable to have all of this expense charged to the 
month in which it is paid, it should be prorated monthly. 
The account may be handled as follows: 



Charge 
From voucher record, with the 
amount of tax bills when re- 
ceived as £er sundry column. 



Credit 
On opening the account, with 
accrued taxes to date, if any. 
From journal voucher, with 
monthly taxes as per tax 
schedule on monthly prorating 
sheet--i/i2 each month. 

Note: By handling the account in this way, it is not necessary 
to credit any reserve for taxes, as the account itself is practically 
a reserve. ^ 

The credit balance of this account represents the com- 
pany's liability for taxes accrued but not due. 

D-5. Interest Accrued— General 

This account shows the liability for interest accrued 
on notes, etc., and should be handled as follows: 



Charge 
From check record, with the 
amount of cash paid for in- 
terest which has accrued, as 
per sundry column. 



Credit 
From journal voucher, with the 
monthly proportion of interest 
accrued on notes payable, as 
per interest schedule on the 
monthly prorating sheet. 

Note : No interest which is paid in advance should go into this 
account, but it should be charged to "Advanced Expense—General " 
and through that account prorated into monthly expense. 

The balance of this account represents the company's 
liability for interest accrued on notes payable. 










304 UNIFIED ACCOUNTING FOR INDUSTRIALS 

D-^. Interest Accrued on Bonds 

This account and the next account, D-7, "Interest 
Accrued on Mortgages," are handled in the same manner 
as D-5, "Interest Accrued — General." 

Liabilities — E. Reserves 

Theoretically and practically, reserves are established 
to separate from surplus a certain amount with which to 
cover losses such as expenditures for repairs, depreciations, 
and the renewal of various kinds of equipment. This is done 
as a conservative measure, as otherwise the available surplus 
would appear larger than it really is, and create a tendency 
to declare dividends not warranted, especially during dull 
times. 

Monthly charges should be made against each reserve, 
and credited to overhead, so that no one particular time 
period will be unduly burdened for such expenditures. These 
expenditures can then be handled in whole or distributed 
over the different departments, so as to become a part of 
the departmental overheads. 

It must be remembered that these reserves are legit- 
imately withheld from profits, because the amounts they 
protect have been prorated over the product manufactured 
and thus charged into costs of production. In other words, 
the cost of goods has been increased by the amount charged 
to depreciation, for replacements, repairs, etc. Any com- 
mercial profit derived from sales, over and above this cost, 
is therefore true profit and not, as would otherwise be the 
case, a portion of the stockholder's investment which, hidden 
in profits, might be returned to him in the form of 
dividends. 

As the name of each reserve account relating to 
tangible assets indicates its purpose and also the sources 
of debit and credit for the same, it will not be necessary to 



CONTROLLING ACCOUNTS-LIABILITIES 30- 

describe every account. The following will serve to illus- 
trate them all : 

£-2, Reserve for Depreciation of Buildings 

This account is typical of all reserve accounts for 
tangible assets, and is handled as follows: 



Credit 
From journal voucher, with 
monthly amounts of estimated 
depreciation on buildings, 
chargeable to overhead or 
commercial expense. 



Charge 

From journal voucher, with 

monthly amount of repairs 

expended on buildings. 
From journal voucher, with the 

difference, if a loss, between 

the initial cost and the selling 

price of buildings sold. 

^ The credit balance of this account is the unused por- 
tion of the reserve. 

In connection with the above, it may be said, that the 
titles of E-1, Real Estate; E-2, Buildings; E-3, Building 
Equipment; E-4, Office Furniture and Equipment- E-5 
Machinery and Tools; E-6, Dies, Jigs and Fixtures! E-/ 
Shop Fixtures and Fittings; E-^, Patterns; and E-P,' 
Drawings, are in each case clearly descriptive of the char- 
acter of the accounts. 

E-10. Reserve for Depreciation of Patents 

Patents are not a tangible asset; therefore, this ac- 
count must be treated differently from the foregoing. It 
shows the amount of depreciation set aside for patents, 
based on the life a patent has to run. 



Charge 
From journal voucher, with the 
difference, if a loss, between 
the initial cost and the selling 
price of any patent sold. 



Credit 
From journal voucher, with the 
monthly prorated amount of 
depreciation for patents, 
chargeable to overhead or 
commercial expense. 



3o6 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



Note : In connection with this account, it should be borne in 
mind that the full life of a patent is seventeen years, and that, 
whatever the valuation of a patent is, it must be depreciated at least 
pro rata according to the time it has to run, so that at the end of 
its life the book valuation will be wiped out. 

The credit balance of this account is the unused por- 
tion of the reserve. 

E— 11. Reserve for Bad Accounts 

This account is handled as follows: 



CONTROLLING ACCOUNTS-LIABILITIES 



Charge 

From journal voucher, with all 
accounts which are deter- 
mined to be uncollectible. 



Credit 

From journal voucher, each 
month with one-twelfth of the 
estimated annual loss from 
uncollectible accounts. 

From incoming cash sheet, with 
any moneys collected on items 
shown on the debit side of 
this account. 



The balance of this account shows the difference between 
the amounts set aside monthly to cover losses from bad 
debts and the actual losses sustained. At the end of the 
year the balance should be closed into profit and loss. 

If anv collections are made on accounts which had been 
written ofif in a preceding year, such collections should not 
be credited to this reserve account but to profit and loss. 

E— 12. Bond Redemption Fund 

This account is credited monthly or quarterly, at the 
discretion of the board of directors, with an amount sufifi 
cient to provide for the redemption of the bonds at thei • 
maturity. 

E— 13. Obsolete Stock 

This account should be handled as follows: 



Charge 
From journal voucher, with the 
inventory value of stock writ- 
ten off to obsolescence. 



307 

Credit 
From journal voucher, with the 
estimated monthly amount re- 
quired to cover the writing off 
of losses due to obsolescence 
of stock. 

E-14. Obsolete Equipment 

obso";';: z:t '' '^"''^^ '- ^^^^^^'^ ^^^ -- ~ « 

LiABiLiT,Es-F. Capital. Bonds, and Mortgages 
Capital Stock Accounts 

Authorized or some similar title, in order to brins on 

nanv 1; v""""' ^'^ '''''' capitalization of the com- 
pany. Speaking generally, however, any account renre 
senting capital stock should show only the stock tha 1 as" 
actually been issued; that is to say, if the authorized capita 
stock of a company is $500,000 divided into $100 000 ore- 
ferred and $400,000 common, and if all of the pS d 
but only $300,000 of the common, is issued, thT pi ',' 
tock accounts should show the issue of $400,000 ai d no 
the entire capitalization of $500,000. In other word, he 

ot the authorized capital stock as has been issued -,nH 
IS actually outstanding. . "^''' ^"'^ 

Furthermore, when stock has been issued and paid for 
by a subscriber and is either donated to, or bought back 
by. the company, such stock becomes tr asurv to k "5 
does not m anv way affect the capital stock acco mts I^^J 



3o8 UNIFIED ACCOUNTING FOR INDUSTRIALS 

or F-2, but must be carried in a separate account as 
treasury stock as an asset (A-12 and A-13). 

When stock has been issued but has not been paid for 
in full; it should be treated in the same manner as any 
other account sale, that is, it should be credited to Capital 
Stock and be charged to Accounts Receivable in the per- 
sonal accounts ledger. 

F-1. Capital Stock— Preferred 

This account should be handled as follows: 



Credit 
From stock record book, the 
total preferred stock which 
has been issued. 



Charge 
From journal voucher, with any 
reduction in preferred stock, 
or any preferred stock for- 
feited for non-payment of 
purchase price. 

The balance of this account represents the company's 
outstanding preferred stock. 

F-2. Capital Stock— Common 

This account would be handled in the same manner 
as F-1, and the balance represents the company's liability 
for outstanding common stock. 

F-3. Bonds 

Bonds will be carried in a holding account the same as 
F-1 and F-2, until redeemed by the company, when the 
account will be charged and cash credited. The balance of 
this account always shows the amount of outstandmg 
bonds for which the company is liable. 

F-4. Mortgages 

Mortgages will be held in account F-4 until retired, at 



CONTROLLING ACCOUNTS-LIABILITIES 309 

which time this account should be charged from the 
voucher record and cash credited. The balance of this 
account always shows the amount of outstanding mort- 
gages for which the company is liable. 

F— 13. Surplus 

This account is a reservoir for holding all moneys made 
over and above actual costs of doing business, and also for 
holdmg certain amounts to cover contingencies, improve- 
ments, etc., not taken care of by reserve accounts. 



Charge 
From journal voucher, with 

amount of dividends declared 

by board of directors. 
From journal voucher, with the 

disposition of any other 

amounts of surplus. 



Credit 
From journal voucher, with the 
balance of Profit and Loss — 
General to be carried to this 
account. 



Note : Under no circumstances can any entry be made to this 
account except by authorization of the board of directors. 

The balance of this account is the undivided profits 
subject to the board of directors' disposal. 

F-.14. Dividends Declared 

This account is a record of the dividends declared and 
paid, which should always be taken from surplus and not 
directly from profit and loss. 



Charge 

From check record, with all 
dividends paid in cash, as per 
sundry column. 

From journal voucher, all divi- 
dends paid in some other way 
than by cash. 



Credit 
From journal voucher, with the 
amount of dividends declared 
by the board of directors, as 
shown by the minute book, 
charging the same to surplus. 



^lO 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



The balance of this account consists of dividends de- 
clared but not yet paid. As a general rule, dividends 
should never be declared unless means are available to pay 
them; therefore, there should never be a balance to this 
account save for the interval between the declaration and 
payment of dividends. 

Profit and Loss — G. Revenues 

G. Total Revenues 

If a controlling account of all sales is desired, this ac- 
count will be set up and represents the revenues from all 
sales, as shown by the sales analysis sheet and by the chart 
covering the various models made, and by any other record 
showing items sold. The account will be handled as 
follows: 



Credit 

From sales analysis sheet, with 
monthly totals of all sales. 



Charge 

From returned goods analysis 
sheet, with monthly totals at 
sales prices, of all sales re- 
turned. 

From sales analysis sheet, with 
the monthly totals of the 
various adjustments named 
thereon. 



The account is balanced out each month into Monthly 
Profit and Loss (K-1). 

G— 1. Road Racer Model 

If it were thought better to have a running controlling 
account for each item in the classification of the sales 
analysis sheet, or the chart, any account from G-1 to G-14 
inclusive would be handled according to the following 
method : 



CONTROLLING ACCOUNTS-PROFIT AND LOSS 311 



Credit 
From sales analysis sheet, with 
monthly total of all sales of 
road racer model. 



Charge 

From returned goods analysis 
sheet, with monthly total of 
all sales returned at sales 
prices for road racer model. 

From sales analysis sheet, with 
monthly totals of the adjust- 
ments named thereon for road 
racer model. 

The account is balanced out each month into the 
Monthly Profit and Loss account. 

Profit and Loss — H. Costs 
H. Cost of Sales 

This is the analysis of costs for the sales items, and 
consequently, whatever method is used, the classifica- 
tion under "H" must be exactly the same as illustrated 
under "G." 

If the costs of sales are handled in one master account, 
the debits and credits will be as follows: 



Charge 
From the cost columns of the 
sales analysis sheet, with 
monthly cost totals of all 
goods sold. 



Credit 

From the cost columns of the 

returned goods sales analysis 

sheet, with monthly cost totals 

of all goods sold and returned. 



The balance of this account represents the cost of 
goods sold, and is closed out each month to the debit of 
Monthly Profit and Loss (K-1). 

If each item in the classification were treated sepa- 
rately, any account from H-1 to H-14 would be handled 
the same as above.* 



♦1,. 1 connection with the "G" and "H" accounts, reference is arain made to 
the sales analysis ^eet which gives the ckssification shown on tLSknTfcom 
trolUng accounts. This sales analysis sheet is used, not only for the r^S ^f ^)Z 
Joi^^^'V^l *^'^'' l"^ *^^ ^I""^ *«t °f «b«t« i« "'«d for recordinHll retuSe" 
lofngout.''^ ""'' ^^ '^^^^'^^'^ °" '^'^' '^'""'^ i^t « they IrcTn llL wh^ 



i 



312 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



Profit and Loss — ^J. Expenses 



J— 1. Commercial or Office Expense 

This account will include all expenses chargeable to the 
commercial end of the business, such as commercial labor, 
commercial material, and commercial general expense, as 
outlined in Chapter XIII, "Commercial or Office Account- 
ing." This account, in total, is handled as follows: 



Charge 

From voucher record, with the 
total amount of commercial 
expense as shown by the 
"Commercial Expense" col- 
umn. 

From journal voucher, with any- 
commercial expense prorated 
over the business not shown 
on voucher record. 



Credit 

From monthly distribution sheet, 
with monthly total of com- 
mercial expense as shown on 
the same, this being the grand 
total of the subsidiary ledger 
commercial accounts which 
are chargeable to Profit and 
Loss. 



This account is balanced out into Monthly Profit and 
Loss. 

J— 2. Overhead 

The one great object of this account is to stabilize fac- 
tory costs, by the equitable distribution of overheads on an 
hourly rate basis or on a percentage basis. It is highly 
undesirable to change these rates more often than is abso- 
lutely necessary, as the change of an overhead rate in a 
business means a change in the inventory valuation of all 
"Work in Progress," ''Component Stores," and ''Finished 
Stores." For instance, if the actual overheads for any 
particular month as shown on the overhead distribution 
sheet were $100,000, and if the amount on a percentage or 
other basis, actually absorbed into production, as shown 
on the production sheets, were $97,000, there would be 



CONTROLLING ACCOUNTS-PROFIT AND LOSS 313 

$3,000 to be disposed of in either one of two ways- first 
It can be taken from this account and wiped out through 
Profit and Loss, or second, a holding account can be 
created under B, ^'Assets-Inventory," in order to allow 
time for showing whether or not the percentage basis or 
the hourly rate basis should be changed. In this way the 
amount spent for overhead would be undistributed ex- 
pense that remained as an asset, the same as "Advanced 
iixpenses— Insurance," "Salesmen," etc. 

This account will embrace all non-productive labor 
non-productive material, and manufacturing general ex- 
pense, and will control the subsidiary ledger factory over- 
head accounts. Its purpose is to wipe out any difference 
through Profit and Loss that may exist between the over- 
head actually applied during the month and that actually 
created by expenditures. The account should be handled as 



Credit 

From production and betterment 
order record, with the total 
amount of factory overhead 
prorated to production and 
betterment orders during the 
month. 



Charge 

From voucher record, with the 
total monthly amount as 
shown by "Overhead" column. 

From journal voucher, with all 
other charges or distributions 
of overhead expenditure not 
included in the voucher rec- 
ord. These charges will be 
the same as shown on the sub- 
sidiary ledger overhead ac- 
counts, and will agree with 
the total general expense 
shown on monthly distribu- 
tion sheet. 

The balance of this account is any unused or excess over- 
head which .s necessarily carried, together with commercial 
expense, mto Monthly Profit and Loss. 



314 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



K — Profit and Loss 



K— 1. Monthly Profit and Loss 

This account will represent the monthly profit or loss 
in the business, and will be closed out monthly into Profit 
and Loss — General. It should be handled as follows: 



Credit 
From journal voucher, with 
revenue of sales, charging the 
same to Revenues. 



Charge 

From journal voucher, with cost 
of sales, crediting the same to 
cost accounts. 

From journal voucher, with ex- 
penses, both commercial and 
unused or excess overhead. 



The balance of this account is the net monthly profit 
or loss, and will be carried into Profit and Loss — General. 

K— 2. Profit and Loss — General 

This account is provided for the accumulation of the 
entries of monthly profit and loss. The account should 
be handled as follows: 



Charge 

From journal voucher, with the 
monthly balance of Profit and 
Loss, if a loss. 



Credit 

From journal voucher, with the 
monthly balance of Profit and 
Loss, if a profit. 



CONTROLLING ACCOUNTS-PROFIT AND LOSS 315 

No transfer from the accumulated Profit and Loss- 
General to ''Surplus," should be made unless by the au- 
thorization of the board of directors or executive commit- 
tee; nor should any authorization to transfer amounts 
from "Surplus" to ''Dividends" he given except by the 
board of directors or executive committee. 

It must also be borne in mind that reserves for depre- 
ciations, etc., are really undivided profits, and therefore, 
the percentages employed for the various assets must also 
be authorized by the board of directors or executive com- 
mittee and duly recorded. 



The balance of this account is carried to surplus quar- 
terly, semiannually, or annually, according to the discre- 
tion of the board of directors. 



This is as far as the comptroller or general accountant 
should handle the accounts shown on the chart of con- 
trolling accounts. 



CHAPTER XVI 

TAKING THE INVENTORY 

Showing the development of a dupHcate ta^ 

method, together with complete specifications 

tor actually taking an inventory. 



CHAPTER XVI 



TAKING THE INVENTORY 

Preliminary Steps 

To take an inventory for valuations only is one thing, 
but to take an inventory for the purpose of perpetuating it 
by count as well as by valuations, at the same time establish- 
ing a definite control of investments and production, is an 
entirely different proposition, and one that requires definite 
plans carefully worked out in advance. These plans must 
embrace not only the methods to be employed in the actual 
taking of the inventory, but also a temporary organization 
for doing the work, a complete classification for production 
and accounting purposes, and a previously prepared pricing 
system as well. Further, the plant itself should be physically 
prepared for the taking of an inventory by issuing explicit 
instructions, sufficiently in advance of the inventory period, 
to the superintendent and foremen to clean up the various 
departments and finish as far as possible all production and 
betterment orders standing as work in progress. 

Too often inventory taking is considered as a sort of 
necessary evil to be disposed of along the lines of least 
resistance, usually by turning this work over to foremen 
and clerks with little or no instruction or preparation from 
cither an accounting or oroduction point of view. 

When inventories are taken in this way, the work of 
counting, sorting, and classifying is usually done in such a 
careless manner as to make the results inaccurate and mis- 
leading, thus necessitating many subsequent adjustments. 

319 



41 



\\ 



1 



i 



i 



320 UNIFIED ACCOUNTING FOR INDUSTRIALS 

It is Strange why to so many people a dollar in cash appears 
so differently from a dollar represented by material for 
which cash has been paid. It is even more strange that 
very often executives in the taking of an inventory will 
not consider the fact that their material and property values 
are just as important, just as real, just as necessary to the 
profit and loss statement as is cash in bank or accounts 
receivable, and it is difficult to understand the laxity with 
which such property values are frequently handled as com- 
pared with the careful methods used for the protection of 
actual cash in the drawer and of cash values in the shape of 

book accounts. 

The first work in connection with inventory taking is 
to taper off on production orders during the two or three 
weeks previous to the inventory date, and delay the starting 
of new orders as much as practicable so there will be as 
little material and as little work in progress in the factory 
as is consistent with reasonable factory practice and sales 
conditions. The works or chief engineer should also be 
conservative in putting new betterment orders into the 
factory just previous to an inventory period. 

More important perhaps than this is the work of getting 
all condemned components out of work in process, and all 
obsolete equipment out of the factory. This should cover 
not only materials and components manufactured, but also 
gages, fixtures, all kinds of tools, and in addition, all 
machinery, belting, etc., together with the thousand and one 
small items usually found under benches, in cupboards, etc., 
that will never be used again, but for disposing of which no 
one ever seems willing to take the responsibility. These 
things should all be gotten together and gone over by the 
engineers and management jointly, if necessary, in order to 
arrive at a decision for their disposition and thus make 
possible the cleaning up of the factory. 



,-i:;-v,:^-.;;'r:rr.:r:aas:«': 



TAKING THE INVENTORY 



321 



Formal Announcement 

It is best to make a formal announcement of the taking 
of inventory, stating when, by whom, and how it is to be 
taken. The following form is given as an example: 

Inventory Specifications 
November 1, 1916 

1. The Rogers Motor Works will be closed from Fri- 
day night, December 29, 1916 until Tuesday morning, 
January 2, 1917, for the purpose of taking inventory. 

2. The following Inventory Committee has been ap- 
pointed: 

William Blake, Engineering Department 
James F. Porter, Production Department 
Eben Williams, Superintendent 
John D. Ropes, Works Engineer 
Harvey Adams, Chief Inspector 
Enoch Delmer, Accounting Department 
Wallace James, Purchasing Department 

Allen Turner, Chairman 

3. The inventory of the Rogers Motor Works will be 
taken as of December 31, 1916 by the duplicate tag system; 
i.e., each and every lot and kind of material will be taken 
by a count under instructions given hereafter, and as soon 
as counted, weighed, or otherwise classified, the data and 
information concerning each particular lot, piece, or kind of 
material, zvill be written with indelible pencil upon an in- 
ventory tag in duplicate. The tag will be wired or other- 
wise attached to the material so counted, weighed, or other- 
wise classified, and the duplicate will be sent to the head- 
quarters of the Inventory Committee as soon as the taking 
of any particular lot of material or section is completed. 



\$ ' 



II 



322 UNIFIED ACCOUNTING FOR INDUSTRIALS 

4. Each superintendent, foreman, and assistant foreman 
will have charge of that section of the plant or office which 
comes under his daily supervision. Each of these will be 
fully assisted by the Inventory Committee in organizing for 
the taking of inventory. It is desired that as many groups 
of men as can be used be put on this work. 

5. The importance of a correct inventory of the Rogers 
Motor Works cannot be overestimated, and these instruc- 
tions are given out at this time in order that every superin- 
tendent, foreman, and department head may have ample 
time to study out and prepare for his particular duties. 

6. All machines and fixed equipment throughout the 
plant, including furniture and fittings, etc., will be numbered 
individually by a brass tag or by having numbers painted 
upon them, so that all equipment of this character, including 
engines, boilers, dynamos, motors, pumps, transmission 
machinery, etc., can be inventoried without shutting down 

the plant. 

7. Tags must not in any instance he destroyed. All 
tags that are given out will he charged hy their numbers 
to the parties receiving them so that any tag number that 
becomes lost or misplaced may be located. If a tag is spoiled 
mark it ''void'' and then turn it in. 

8. As soon as any superintendent, foreman, sub-foreman, 
or assistant, has gone over all of the space allotted to him 
and made sure that every item has been covered by a tag, 
he will immediately report to the Inventory Committee so 
that other inventory work may be assigned if necessary. 

9. No tags may be pulled at any point in the plant until 
the signal for release has gone out to the factory from the 
Inventory Committee. As soon as tags are pulled it con- 
stitutes a release of the items covered, and preparation may 
be at once made to return such items to regular operation. 
Upon the pulling of tags, they are to be at once sent to the 



TAKING THE INVENTORY 



323 



Inventory Committee in the main office where they will 
immediately be matched up by numbers with the duplicate 
to see that no numbers have been lost or destroyed. 

10. All equipment, tools, or material, of any kind in- 
voiced to the company prior to January 1, 1917 and not 
received until after this date, must be included in the inven- 
tory, and all such invoices must be plainly stamped "season 
of 1916 included in inventory." 

11. All equipment, tools, or material invoiced prior to 
January 1, 1917 but not unloaded until after January 1, 
1917, must be inventoried from the invoice and every pre- 
caution must be taken to keep such goods entirely separate 
from other inventoried items until after the inventory tags 
have been checked up. 

12. Items received prior to January 1, 1917 but not 
bearing an invoice date until on or after January 1, must 
not be included in the inventory. 

13. Superintendents, foremen, and assistant foremen are 
hereby instructed to clean up on the work in their depart- 
ments in every way possible prior to the taking of the inven- 
tory and to have ready Saturday morning, December 30, 
1916, all materials, works, etc., sorted by kinds and 
arranged, piled or stacked ready for counting or weighing. 

14. The chief inspector is hereby instructed to have 
the inspection work cleaned up by Saturday morning, De- 
cember 30, 1916, working a special inspection force all night 
on Friday, the 29th of December, if necessary, to accomplish 
this. All finished components must be in component stores 
for the taking of inventory. 

15. The production department is hereby instructed to 
issue from general stores the minimum amount of material 
possible on Thursday, December 28, and Friday, December 



29 






16. The production engineer is hereby instructed U 



■ 



324 UNIFIED ACCOUNTING FOR INDUSTRIALS 

transfer on the 28th and 29th of December, all surplus tools, 
fixtures, etc., from crib or shop stores to general tool stores, 
so that work in taking inventory and classifying it may be 
minimized in every possible way ; also to transfer from crib 
or shop stores to general stores before December 29, 1916 
any and all supplies that are a surplus, and to have all crib 
cards show ''Balance on Hand" in each crib and have 
maximum and minimum amounts established. 

17. All superintendents, engineers, foremen, assistant 
foremen, and factory clerks must give their undivided time 
and attention to the taking of this inventory as between 
Saturday morning, December 30, 1916, and Tuesday morn- 
ing, January 2, 1917. Special instructions for organization, 
and a chart covering same, will be issued by the Inventory 
Committee as a guide in taking the inventory. 

18. The foremen and assistant foremen of each depart- 
ment will supervise the weighing, counting, and recording 
of all items inventoried in their department, and will be held 
strictly accountable for correct numbering, naming, location, 
etc. In preparation for inventory, they must collect all small 
tools, cutters, fixtures, etc., and get them into the tool cribs 
or on benches properly arranged by "kinds" for counting. 

19. Each department will be provided with an engineer 
or engineers to assist foremen and assistant foremen in giv- 
ing a complete description of each part and the next opera- 
tion to be done and any change in sequence. This is of the 
utmost importance in connection with production after 
January 1, 1911, as upon the correctness of the inventory, 
showing the number of pieces done up to any given opera- 
tion, schedules for the work throughout the factory must 

be adjusted. 

20. The inspection department, the production depart- 
ment, and the salvage department, are hereby instructed 
to work as closely together during the entire month of De- 



TAKING THE INVENTORY 



325 



cember as possible in order to sift out from "Work in 
Progress" each and every component that is completely 
condemned and beyond repair. 

21. The inspection department is hereby instructed to 
take a complete inventory in detail of all components that 
are imperfect but subject to repairs, separating each com- 
ponent in a class by itself and showing on each component 
the operation next to be done. In others words, all rejected 
work that is subject to repairs must be totaled into a separate 
inventory figure. The responsibility for this will rest 
entirely upon the inspection department. 

22. Should any foreman find in his department any 
materials, tools, or fixtures, etc., the value of which is ques- 
tionable, he, in conjunction with the engineer appointed to 
his division, is hereby authorized to give an estimated value. 
This must be written on the tag in indelible pencil at 
the time the estimate is made, together with the word 
''Estimate" to precede the amount. 

2Z. Special instructions are hereby given and authoriza- 
tion made to place all obsolete components and scrap in the 
salvage department on or before inventory, and it is 
reiterated here that the inspection department is instructed 
to see that all obsolete stock and condemned components are 
put in the salvage department as rapidly as possible during 
the entire month of December. If, however, any condemned 
items are found that have not been disposed of, full par- 
ticulars as to the condition of such items must be specially 
written on the tag and marked "Special" so as to call 
attention to it. 

24. The general stores keeper and the tool stores keeper 
are hereby instructed to make a complete classification of all 
materials and tools on hand which for any reasons have 
become obsolete in order that the purchasing department 
may dispose of them. 



326 UNIFIED ACCOUNTING FOR INDUSTRIALS 

25. On the night of December 29, 1916, the superin- 
tendent of assembly must return to component stores all 
finished components that have not been assembled. 

26. After the inventory of any section allotted to a 
superintendent or his foreman has been completed, the 
superintendent or foreman must sign a statement to the 
effect that the inventory has been completed to the best of 
his knowledge and belief, and immediately send it to the 
Inventory Committee. This statement is necessary so 
that a record may be on file for insurance and accounting 
purposes. 

27 . If stock cannot be weighed or counted, a careful 
estimate must be made by the superintendent of the depart- 
ment in which the estimate is required and the tag marked 
''Estimate" and signed by him as an approval of it. 

2^. The following assignments have been made: (De- 
tailed assignments to each floor of each building should 
follow. ) 

Organizing the Force 

Each building should be designated by a letter and each 
floor by a number. Then, opposite the building letters, 
plus the number, should be written the name of the man 
who is to be in charge of that particular section for the 
taking of the inventory, followed by the names of all special 
assistants that may be required, together with the number 
of regular employees that will be necessary to count, weigh, 
and handle the materials to be inventoried — all of which is 
merely preparatory work on the part of the engineers, 
superintendents, and processing department heads. It is 
also highly desirable that foremen or department heads 
should be made responsible for this work in their respec- 
tive departments — supplemented, where necessary, by en- 
gineers and draftsmen to act as assistants. 



TAKING THE INVENTORY 
Classification of Assets 

The next thing of importance is the classification of 
assets which the inventory will include, which must be the 
same classification used on the balance sheet under "Assets " 
details of which can be found in Chapter XIV, "Controlling 
Accounts," as follows: 

A. General Stores 

B. Work in Progress-— Production Orders 

C. Work in Progress— Betterment Orders 

D. Work in Progress— Components Rejected for 

Repairs 

E. Component Stores 

F. Finished Stores 

G. Shop Stores 

H. Miscellaneous Equipment (See controlling ac- 
count C-8; show per cent used.) 

I. Real Estate (by plots) 

J. Buildings 

K. Building Equipment 

L. Office Furniture and Equipment 

M. Machinery and Tools 

N. Dies, Jigs, Fixtures, and Gages 

O. Power Plant 

P. Shop Fixtures and Fittings 

Q. Patterns 

R. Drawings 

S. Railroad 

T. Railroad Equipment 

Each and every item in the factory which constitutes a 
fixed or permanent asset as shown by the balance sheet 
S' ' 'fi?'' ''''^^' ''Investments," consisting of items from 
1 to T inclusive, must have for its identification wher- 
ever possible, a number attached to it, this number serving 



ki ;") 



i 



J.* 



;i t- 



328 UNIFIED ACCOUNTING FOR INDUSTRIALS 

two purposes — one for identification in case of transfer from 
one geographical point to another, and one as identification 
for valuations from year to year. By this method, means 
are provided for obtaining a proof of loss in case of fire, and 
for establishing and maintaining a perpetual inventory on 
permanent investment assets. Once the assets of the plant 
have been inventoried and numbered in this manner, it will 
never be necessary to retake the inventory physically, the 
entire scheme being protected by betterment orders as they 
are completed from time to time and added to these items, 
each item being numbered at the time it is completed and 
put to use in the plant and the fact being shown by a proper 
record. 

Therefore, as this classification — which is the general 
classification of controlling accounts — represents the in- 
ventory values on the balance sheet, the entire inventory 
must be taken and classified accordingly, and the letter 
symbolizing the classification to which the item inven- 
toried belongs, . must be shown on the inventory tags 
illustrated in Form 93. 

In connection with the material kept in general stores, 
a supplementary classification can be used. For instance, if 
general stores is represented by "A," after this could be 
written either the name of the items according to the 
classified index of general stores, shown in Qiapter IV, or a 
Dewey decimal number may be used, as in Form 95. In the 
latter case, "A" would mean general stores, 7 could mean 
*'steel," and .1 "high speed steel." In other words, A-7.1 
would indicate a high speed steel in general stores. Any 
one of several arrangements of this kind can be cieated to 
meet particular requirements. 

In the classification tmder "Work in Progress" a split 
is made; i.e., it is divided into "Work in Progress — Pro- 
duction Orders"; "Work in Progress — Betterment 



TAKING THE INVENTORY 



329 



Orders"; and "Work in Progress— Components Rejected 
for Repairs." It is better at an inventory period to divide 
"Work in Progress" into this classification rather than to 
take it as one account, for the reason that it gives oppor- 
tunity for a check-up on production and production sched- 
ules and also on the tools required for same. Hence, this 
classification can be used by the production and tools de- 
partments for inventory purposes. 

Pricing the Inventory 

In order to make sure that valuations are as nearly 
correct as possible, the following departments should be 
called upon to assist the inventory committee in the matter 
of pricing. 

The pricing of all raw materials, general supplies, etc., 
bought outside and located in general stores, should be 
obtained from the purchasing department in conjunction 
with the general stores records. 

The pricing of tools, fixtures, cutters, and gages, made 
in the factory, should be obtained from the accounting 
department; except where estimating is required, in which 
case the valuation is obtained from the engineering depart- 
ment. 

The pricing of all machine tools, transmission ma- 
chinery, transportation equipment, etc., covered by identi- 
fication or inventory numbers, should be obtained from 
the accounting department and the works engineer. 

The inventory committee should be given access to 
the different departments, and the latter should be author- 
ized and instructed to assist the inventory committee in 
every way possible in obtaining a correct pricing of all 
inventoried items. 

The price to be used on all raw materials should be the 
last purchase price from any regular source of supply, 



F» 



:f i \ 



330 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



irrespective of what may have been paid for the actual 
material on hand. 

The price of all work in progress should be the labor 
cost plus the material cost, plus regular overhead. 

The price of all components and finished stores should 
be the cost price of the last regular production order for 
same. 

The price of all equipment should be the betterment or 
purchase order price and must include any regular equip- 
ment, freight, and installation expense. 

No depreciations should be applied in placing valua- 
tions upon fixed assets. Assets are valued as they stand, 
i.e., at the original purchase price. 

Inventory Tag 

The design of the inventory tag is such that when the 
stub is removed at the perforated Hne it leaves a standard 
4x6 card, in duplicate, thus permitting the inventory tags 
to be filed in a regular 4x6 filing cabinet. If this is handled 
properly it will greatly facilitate pricing and extension 
work, and will leave the inventory in a perfectly classified 
condition on the original tags. By using a tag of this 
character all t'le help available can be used to advantage 
as it gives opportunity to create a much bigger organiza- 
tion for the taking of inventory than is usually employed. 

The tag has two prime divisions (Form 93), arranged 
in such a manner that either one or the other side of the 
tag can be used for any and all kinds of items to be in- 
ventoried. Under the heading "Processed Work to Be 
Entered Here" must be written up all work in progress 
an'di all component stores, while the labor cost, material 
cost and overhead cost are entered on the lines provided 
for this purpose. 

On the other side of the tag, under the heading "Write 



TAKING THE INVENTORY 



331 



All General Stores and Equipment Here," are provided 
captions to take care of any and all items in the plant, 
their description and serial number, and also whether the 
Item is -In" or "Out of Use." In taking supplies, ma- 
terials, etc., the "Unit of Measure" must be shown without 
exception as well as the price per unit of measure. 

These tags are all numbered and attached to the partic- 
ular items covered. When the tag is pulled, the stub with 
the number on it will be left on the item inventoried; 
therefore, it is very essential that the location be carefully 
defined as provided for on the tag, so that any item re- 
garding which a dispute arises, may be readily located. Each 
tag must show by the word "Classification" the exact alpha- 
betical division to which the item inventoried belongs. 

As soon as the inventory is completed and all tags are 
pulled, they will immediately be sorted according to this 
classification, and divided among several groups of pricers, 
each group possessing the necessary data or experience to 
do this work correctly. 

Disposition of Tags 

As soon as the inventory has been classified and in- 
dexed, one set of priced cards should be arranged in a 
filing cabinet in 4 x 6 drawers and kept as a permanent 
record for the accounting department to use either as 
reference matter regarding valuations or as reference 
matter in case of fire, as by this inventorv proof of loss 
can always be obtained in so far as all fixed investments, 
etc., are concerned. 

The duplicate set of tags should be divided up. All 
those relating to production should be sent to the pro- 
duction department, to check up their production records. 
Those for betterment orders should be sent to the chief 
engineer or works engineer, and those for stores to the 



ItPI 



332 UNIFIED ACCOUNTING FOR INDUSTRIALS 

Stores recorder. After being checked, the duplicate sets can 
be destroyed, but the original set of tags should be kept in a 
vault for safety. 

Equipment Record 

It is necessary either for the works manager or the 
accounting department to have a complete record of all 
the equipment in the plant. Form 94 has been provided, 
to show any item of equipment covered by an inven- 
tory number. It is a 5 x 8 card printed on both sides ; the 
front being for data relative to a description of the item 
together with the various numbers belonging to it, its 
location, and also the date of installation, etc., where new 
equipment is provided. Several lines are given for this 
information, so that entries may be made on the same card 
whenever equipment is changed geographically from one 
location to another, thus providing a running record for 
such transfers. The back of the card is reserved for values. 
For purchases outside, the data come under "Purchase 
Cost" section; when manufactured, under the "Manufac- 
tured Cost" section; between these two sections columns 
are provided to register any additional values together 
with their date and order number. 

On the right of the card, space is arranged for keeping 
a record of the repairs showing the date repairs were made, 
and the amount. 

With this record completed, classified, and indexed, a 
perpetual inventory may be checked off and made up. 

As a general thing, this record would be practically 
the only one that is required for any ordinary plant. 
Should, however, a different captioning be needed to cover 
any particular item or items, it can easily be arranged 
provided that the method of keeping running costs, ad- 
ditional values, and repair costs remains the same. This 



i 



TAKING THE INVENTORY 



333 



IS important for the reason that under certain classes of 
machinery an annual depreciation is written oflf on a per- 
centage basis. The repair costs shown on these records 
either as against an individual machine or against a group 
of machines, will indicate whether the percentage used to 
cover depreciations and repairs is too large or too small, by 
simply taking the total amount of repair costs for any 
penod of time and checking it against the amount that 
IS set aside as a reserve for depreciation. 



f 



CHAPTER XVII 

THE WORK OF THE SYSTEMATIZER 

Showing the difference between systematiz- 
ing and accounting, and outlining the sphere 
of the systematizer's work. 



I =■ 



' 



iii 



I 



i 
fHf 



CHAPTER XVII 



THE WORK OF THE SYSTEMATIZER 

Relation Between Standardized Accounting and 
Systematizing 

As stated in the preface, this volume was planned and 
developed as a work on accountancy rather than on sys- 
tematization; but in discussing the various phases of ac- 
countancy, due consideration has been given to the fact 
that a certain amount of work is to be done from a purely 
systematizing point of view so that the operations of the 
business may properly co-ordinate with its accounting. 

In other words, the standardized methods of account- 
ing set forth herein do not interfere in any way with the 
work of the systematizer. On the contrary, there is ample 
opportunity for the latter to develop systems that will 
meet the requirements of a specific business and will also 
fit into the methods of accounting outlined in this volume. 
This is so because the accounting methods presented in the 
foregoing chapters can be applied to almost any manu- 
facturing business, not only in principle but in much of the 
detail offered; while in the things that concern the sys- 
tematizer, there is much less opportunity for standardiza- 
tion, and it is practically impossible to devise a detailed 
system that will apply to any considerable number of 
manufacturing businesses in different lines. 

Special Features of the Systematizer's Work 

To illustrate the possibilities for the systematizer, a few 

337 



338 UNIFIED ACCOUNTING FOR INDUSTRIALS 

special features that properly belong to his field may be 
mentioned. The subject of "organization," for instance, 
is not treated in this book further than to show the rela- 
tion of the accounting department to the general organi- 
zation, as illustrated by a chart of departmental divisions. 
A systematizer would take this chart and from it draw up 
specifications detailing the duties of each department head 
and the interdepartmental relations, especially in connec- 
tion with office work. 

Again, this volume has not given a detailed method for 
making the sales analysis required for a monthly summary, 
or for the routing and handling of sales orders, nor has it 
gone into the details incident to shipping. All of these are 
responsibilities of the sales department and worthy of 
special consideration in connection with system work. 

A matter of no small importance is the compilation of 
standard data concerning drawings, blue-prints, etc., espe- 
cially in laboratory and experimental work. None of this 
is gone into in this work; it belongs to the field of systema- 
tization and is entirely foreign to the accounting discussed 
in the foregoing chapters. 

A wonderful opportunity is offered the office man, or 
systematizer, in connection with the mailing and filing de- 
partment. Here it is his function to design and develop 
such methods and systems as will facilitate the opening 
and distribution of mail, and the handling and filing of 
correspondence, etc., to meet the particular requirements 
of each individual business. 

In nearly all manufacturing establishments, and espe- 
cially in the larger concerns, a vast amount of statistics is 
often handled entirely outside of the accounting depart- 
ment. The figures used in these statistics are frequently 
derived from the regular books of account, and sometimes 
they are combinations of these figures with those obtained 



THE WORK OF THE SYSTEMATIZER 



339 



from other sources. In some institutions, a statistical 
bureau is considered of almost as much value as the ac- 
counting department. This is another type of work that 
must be designed with particular reference to the business 
it is to cover, and which lies beyond the functions of the 
accountant. 

Office Appliances 

The suggestions of the foregoing paragraphs offer a 
worid of opportunity for the ingenuity of the systema- 
tizer. Furthermore, many kinds of appliances have been 
invented to facilitate the routine work of the office. Some 
of these are most meritorious; most of them are good; but 
they cannot all be used in each and every business, and it 
remains for the systematizer to prescribe such appliances 
as are best fitted to the particular business under con- 
sideration. 

As examples of such labor-saving devices, particular 
reference may be made to the dictaphone ; to the various 
kinds of adding and computing machines; to the very 
intricate calculating and accounting machines, such as the 
Powers and Hollerith; and to the various devices employed 
for the opening and sealing of letters, registering of the 
same, etc., to say nothing of the various kinds of type- 
writers, filing cases, etc., that have been gotten up to take 
care of individual and special requirements. The specifica- 
tion and installation of all such equipment come under the 
head of systematizing rather than accounting, although 
the accounting work should be so designed as to take 
advantage of any and all mechanical means for compiling, 
sorting, and distributing figures. 

Finally, it is a very special kind of system work to de- 
sign the forms, headings, etc., under which tabulations 
shall be made on such accounting machines as the Powers 



t: f- 



340 UNIFIED ACCOUNTING FOR INDUSTRIALS 

and Hollerith. These machines not only cover the regular 
accounting work, as indicated in the foregoing chapters, 
but also a large amount of statistical data. None of these 
forms, headings, etc., could be standardized, but must be 
prepared to meet special requirements. 

The author, in concluding his work, is especially de- 
sirous of calling attention to these facts in order that there 
may be no misunderstanding as to the character and scope 
of the work. Also, he wishes to emphasize the fact that 
this book does not aim to be and cannot be a panacea for 
all manufacturing ills, but rather confines itself to specific 
lines of accountancy, diverging from these only in so far 
as certain shop practices in connection with industrial en- 
gineering are necessary to make clear the accounting 
principles and practices set forth, and the dependence of the 
one on the other. 



i 



"i 



FORMS 



FINANCIAL STATEMENTS AND REPORTS 



(Forms referred to in Qiapter II) 



I 



if ^! 






342 



UNIFIED ACCOUNTING FOR INDUSTRIALS 

Balance Sheet 



Assets 


Amounts 


From Last Month 


From Last Year 


Increase 


Decrease \ 


Increase 


Decrease 


Current: (■ 

Cash in Banks 

Petty Cash 

Accounts Receivable 

Accounts Receivable Past 
Due 


$25,070.20 

200.00 

120,172.80 

14,280.70 

3,280.00 

1,090.20 
6,602.00 

3,192.00 

2,166.20 

870.00 

* *7,bbo.66 

14,000.00 


$26,6lb'.66 
7,314.00 


$6,526.98 

7,270.00 

798.00 
484.00 
350.00 






Accounts Receivable Con-^ 
signed 

Accounts Receivable Sus- 
pense 

Notes Receivable 

Advanced Expenses In- 




212.58 
512.25 




Advanced Expenses Ad- 






venising ............ 

Advanced Expenses 






Treasury Bonds 

Treasury Stock Preferred 
Treasury Stock Common. 






j 
Total 


it97.9H.10 

Net 


f28,6i8.S.J 1 
13,219.85 ' 

1 


$l5,m-98 






1 




Inventory: ; 
General Stores 


$112,490.00 
47,153.15 
67,510.00 
56,410.55 


1 
$23,516.99 


$'1*7,1 27.'55 

13,021.25 

1,814.38 


• •••••••• 




Work in Progress 

Semi-Finished Stores 

Finished Stores 1 

Finished Stores (Branches) 












Total 


Si8S,56S.70 

Net 


$23,516.99 


$31,963.18 
8M6.19 
















Invbsticbnt: 

Real Estate 

Buildings 

Buildings Equipment. . . . 
OflBce Furniture and 


$40,000.00 

118.600.00 

26,700.00 

8,970.60 

138,677.72 

9,426.10 

11,286.50 

15,297.65 

4.200.79 

2,100.00 

1,000.00 

1,896.00 


■ "$324.6 i 

1,100.00 
1,890.15 
1,538.74 

320.00 
270.66 








£.auipment 

Machinery and Tools... 
T)i^« and Titrs 




Shop Fixtures and 

Fittings 

Miscellaneous Eqmpment 
Patterns 




Drawings 




Patents 

Experimental and Devel- 
opment 










Good-Will and Agencies. 


t 




Total 


1^8,155.36 


$5,Ut.90 

1 


1 ; 


i 


Tntal Assets. • • • « 


$859.6^3.16 
Net 


S57.m.72, $',7.r.92.lG 






10,216.56 


•******'* 


\ 





Form I. 



FORMS— FINANCIAL STATEMENTS AND REPORTS 343 
Month of January, 31 days, 1917 



Liabilities 


Amounts 


From Last Month 1 


From Last Year 


Increase 


Decrease 


Increase 


Decrease 


Current: 

Accounts Payable Cur- 
rent 


$109,627.68 

20,180.00 

40,000.00 

560.00 

318.10 


$12,776.55 

1 

3,100.00 


$22,*600'.66 
1 






Accounts Payable Dat- 
ings 




Notes Payable 




Taxes Accrued 

Interest Accrued Gen- 
eral 


87.45 
47.37 




Interest Accrued on 
Bonds 

Interest Accrued on 
Mortgages 




Total 


1/70,685.78 

Net 


$16,011.37 


$22,600.00 
6.588.63 










Reserves: 

Reserve for Real Estate 
Reserve for Buildings. . 
Reserve for Building 
Eauioment 


$266.66 
1,550.66 

620.60 

346.89 

5,150.48 
182.60 

939.22 
199.41 
179.20 

6,666.66 


1 

! 

$33.33 
177.08 

45.75 

20.01 

550.33 
46.82 

108.11 
20.05 
14.75 

833.33 








Reserve for Office Fur. 

& Equipment 

Reserve tor Machy. & 

Tools 




Reserve for Dies & Tigs 

Reserve for Shop Fix. 

ii Fittinsrs 




Reserve for Patterns, . . 
Reserve for Drawings. . 
Reserve for Patents. . . . 
Reserve for Bad Ac- 
counts 






Bond Redemption Fund 




Total 


$16,102.38 


$1,8^9.56 








Capital, Bonds & 

Mortgages: 
Capital Stock Preferred 
Capital Stock Common. 

Bonds 

MortBaires 


$200,000.00 
400,000.00 

















1 




Total 


$600,000.00 












Total Liabilities 


$7S6,788.t6 i 

Net 


1 $17,860.93 


$22,600.00 \ 
h739.07 1 





Surplus and Dividends 
Profit and Loss General 
Surplus 


$63,532.72 

! 

9,322.28 


$13,714.04 
1 

! 1,241.59 

1 

1 


) 

• ' * ! 

1 




Dividends (Accrued) 
Preferred 




Dividends Common 


': i 


Total 


$72,835.00 


1 $l.i,955.6S 




. 






Net Liabilities j 

i 


$859,6^3.16 


$10,216.56 


i 
1 






II 



(a) Balance Sheet 



344 UNIFIED ACCOUNTING FOR INDUSTRIALS 
Profit and Loss Month of January, 31 days, 1917 



Analysis 



Revenue: 

Road Racer Model. . . 

Roadster Model 

Special Model 

Jobbing Model 

Ladies Model 

Juvenile's Model 

Racer Model 

Motorcycle 4 H. P. 

Service 

Motorcycle 4 H. P. 

Tourist 

Motorcycle 6 H. P 

Twin 

Repairs 

Parts, Semi-Finished 

Stores 

General Stores 

Unclassified 



Month of 
Jan. 1917 



From Last Month 



Increase Decrease 



Total 



$2,814.15 

15,319.80 

7,420.00 

9,905.25 

1,179.90 

480.00 

420.90 

43,443.25 

33,326-45 

16,690.30 
3,411.90 

7,927.15 
454.95 



$li2,79i.OO 

Net 



$7,680.60 
4,090.75 

190.66 



34,762.08 



$285.00 

1,770.26 
66.66 



11,949.00 
1,320.78 

5,050.10 






Costs of Revenue: 
Road Racer Model. .. 

Roadster Model 

Special Model 

Jobbing Model 

Ladies Model 

Juvenile's Model 

Pacer Model 

Motorcycle 4 H. P. 

Service 

Motorcjrcle 4 H. P. 

Tourist 

Motorcycle 6 H. P. 

Twin 

Repairs 

Parts, Semi-Finished 

Stores 

General Stores 



Unclassified 



Total 



Gross Profit. 



Profit and Loss: 
>Jet Commercial Ex- 
pense 

Overhead I U-'ff 

Replacements & Guar- 
antees 



Net Total Expense . . . 

NetMonthlyJPj;f|- 

Profit and Loss Gen- 
eral 



$2,082.47 

12,04944 

5,727.52 

7,825.14 

896.72 

367.60 

311.46 

34,325.85 

26,250.80 

13,262.00 
2,217.23 

4,782.77 
397.25 



$110,^96.25 

Net 



$6,130.80 
3,149.30 



144.40 



27,666.79 



20,106.97 



70.00 



122,298.17 



Eight 
Months 
To Date 



$210.00 

> ••••••• 

1,398.46 
50.82 



9,559.20 
858.00 

2,259.04 



$Ji9.767.5S 
S1,96S.18 



W2.297.75 



$17,285.30 
56.82 



$n,S42.1* 

Net 



$852.50 



$852.50 
592.65 



16,085.57 



59.50 



$17,80^.30 



$7,180.75 

44,780.00 

21,090.70 

40,275.15 

4,170.00 

3,280.00 

1,110.00 

216,210.90 

377,950.00 

42,675.85 
9,256.00 

15,816.25 
2,009.15 



To Date 

Same 

Period 

Last Year 



$785,80i.75 



$259.85 



$259.85 



$5,313.20 

30,002.60 

15,184.80 

35,039.20 

2,780.00 

1,870.00 

810.30 

170,113.80 

287,111,13 

30,736.00 
5,224.00 

9,115.12 
1,709.10 



$595,009.25 



$112,260.25 
5,680.25 



$n7,9iO.S0 



tU,9S5.6S 



$U,956.6S 



$72,855.00 
72,855.00 



Form I. (h) Profit and Loss 



FORMS-FINANCIAL STATEMENTS AND REPORTS 345 
Commercial Expense Month of January, 31 days, 1917 



Analysis 



General Commercial 
Expense; 

Salaries — Officers 

Salaries— Clerical ... 

Labor — General 

Telegraph and Tele- 
phone 

Office Supplies 

Taxes, Corporation..*. 

Legal Expenses 

Patent Expenses 

Bicycle Royalties 

Frt. and Express 
Commercial 

Insurance on Stock. . 

Interest Paid 

Discount Allowed.... 

Rent 

Commercial Reserve's*. 
Expenses Unclassified 
Total 



Month of 
Jan. 1917 



Selling Expense: 

Salaries — Salesmen .. 

Labor — General 

Commission on Sales 

Traveling 

Entertainment ..!..! 

Rebates and Allow- 
ances 

Shows and Demon- 
strations 

Postage 

Umce Supplies 

Adv. Periodicals 

Adv. Circulars 

Adv. Catalogues 

Selling Expense Un-' 
classified 



$3,083.30 

2,82500 

525.00 

270.50 
285.90 

300.00 

60.00 

140.70 

136.75 
210.00 

762.dd 

75.00 

853.34 

178.66 



From Last Month 



Incr 



ease 



$150.00 
75.30 

62.25 



Decrease 



$9,706.15 

Net 



60.00 



Eight 
Months 
To Date 



$37.00 
250.00 



115.56 



31.00 



• ••••• I 



Total 



Grand Total Com- 
mercial Exp 



$1,250.00 

350.00 

1,478.60 

903.50 

110.70 

578.00 



379.40 

275.00 

2,168.90 

2,000.00 



$m.ii 

63.93 



$300.00 



81.18 



$399.18 



500.00 
210.00 



Credit: 

Interest Received 

Cash Discount Earned 
Credits Unclassified.. 



309.00 



$9,803.10 

Net 



Total. 



Net Commercial Ex- 
pense 



$19,509.25 

Net 



61.50 



30.00 

100.00 

33.08 



$20,666.40 

17,250.00 

3,848.63 

2,003.76 
2,025.20 

••••••••a 

1,935.00 

486.49 

1,013.60 

957.00 
1,512.00 

' *4,590'.56 

600.00 

4,462.00 

2,825.82 



To Date 

Same 

Period 

Last Year 



• •••••• 



i 



'•••••• 



$6Jk,176.1,6 



47.38 



$650.00 

1,500.00 

73.95 



$1,281.96 
1,193.57 



$88.39 



$l,7i5.07 
1.257.50 



$88.39 



$7,500.00 

2,800.00 

7,647.80 

6,698.00 

797.60 

4,217.50 



2,652.81 

2,207.00 

15,297.20 

10,200.10 



$487.57 



$2,223.95 

Net 

$17,285.30 



Sales for Month. . . 
Com. Percentage for 

Month 

Sales Percentage 

for month* 



$H2,79100 
12.1% 
6.9% 



$85.00 
360.00 



$U5.00 
405.00 

$8.52.50 



2,262.38 



$62,280.39 



I ' ' 



$40.00 



$126,456.85 



i i 



$40.00 



• • • • ■ 



$42,745.14 



*-S7o 



$4,285.00 

9,360.00 

551.60 

$14,196.60 
$112,260.25 



$785,804.75 






^Ratio between Selling Expense and Total Sales for the month. 
Form I. (c) Commercial Expense 



Ml 



346 UNIFIED ACCOUNTING FOR INDUSTRIALS 
Factory Overhead Month of January, 31 days, 1917 



Analysis 


Month of 
i Jan. 1917 


Fronj Last Month 


Eight 
Months 
To Date 


To Date 

Same 

Period 

Lait Year 




Increase 


Decrease 


NoN-PaoDUCTivE Labor: 
Foremen 


1 

$1,515.45 

950.64 

4,840.35 


$100.00 

50.00 

1,460.00 




$11,200.00 

5,900.00 

40,277.06 

157,377.06 




Clerks 






Manufacturing 






General 






Total 


$7,m.u 


$1,610.00 












Non-Productive Mate- 
rial: 
Shipping Supplies 


$1,560.75 
470.20 

915.00 
1,172.65 


$175.80 
90.00 

116.05 
110.00 




$9,875.62 
3,369.21 

6,211.85 
10,239.20 




Operating Supplies 

Miscellaneous Equip- 
ment 










Fuels 

General 






Total 


$4,118.60 


$m.85 




$29,695.88 










Non-Productivk Ex- 
pense: 
Monthly Depreciation.. 


$2,139.32 1 
798.00 
70.00 

* "l',896.d6 

250.00 

165.00 

35.40 


' $1 65 !66 

28.95 
18.75 




$23,942.08 

5,598.20 

560.00 

* 'i2,2'60.28 

1,625.90 

815.25 

212.55 




Monthly Insurance 




Monthly Taxes 




Monthly Rent 

Frt. and Express Mfg. . 
Current for Lighting. .. 








Gas for Lighting 








•.•.••••« 




Overhead Unclassified.. 




Total 


*5,555.78 


$21t.70 


1 


Ii5,014.t6 










Grand Total Overhead 


$16,778.82 


$2,SU-55 


i 

1 


$132,087.20 




^1 1 


1 

1 




'1 1 
Overhead Used (cb 80% ! $16,722.00 




I 

• ■••••••a 1 

$259.85 1 

1 


$m.m.9s 

5,680.25 




Overhead {g""«^^r 56.8t 




{ excess j 




— : ^1 

Productive Labor for 1 
Month $20,902.50 

Overhead Percentage 

for month 80.27% 


1 
$3,218.00 


1.52% 


1 





Form I. (d) Factory Overhead 



FORMS-FINANCIAL STATEMENTS AND REPORTS 347 
Factory Production Month of January, 31 days, 1917 



Analysis 



Production: 
Productive Labor. . . . 
Overhead Used @ 80% 

General Stores 

Semi-Finished Stores. 



Total Monthly Pro- 
duction 



Month of 
Jan. 1917 



$20,902.50 
16,722.00 
45,954.22 
27,221.85 



From Last Month 



Increase Decrease 



$3,218.00 
2,574.40 



$110,800.57 

Net 



Plus Previous Work 
in Progress 

Total Work in 
Progress 



$64,280.70 



Finished Production: 

Charged to Semi-Fin- 
ished Stores 

Charged to Finished 
Stores 

Charged to Better- 
ments 

Total Production 
Finished 



$175,081.27 



$290.00 
6,441.77 



Eight 
Months 
To Date 



To Date 

Same 

Period 

Last Year 



$5,792.40 



$6,731.77 
9S9.S7 



$21,200.60 

101,284.62 

5,44290 



Net Work in Prog- 
ress 

Depreciation Repairs: 

Labor 

Material 



$27,091.26 
5,442.90 



$16,345.98 



118,564.96 

118,564.96 

220,199.89 

89,273.12 



$576,248.09 



$22,780.00 



Total 



Charged to Reserves: 

Reserve for Real Es- 
tate 

Reserve for Buildings 

Reserve for Building 
Equipment 

Reserve for Office, 
Fur. & Equipment 

Reserve for Machy. 
& Tools .'. 

Reserve for Dies & 

„ Jigs 

Reserve for Shop 
Fix. & Fittings. . . . 

Reserve for Patterns. 

Reserve for Drawings 



Total 



Total Reserve Charge 




Prog^?s's%T80.7r''" ^°'^ '" ^''"^'■^^^ ^^^•'53.15 and Previous Work im 

Form I. (e) Factory Production 



I 



348 UNIFIED ACCOUNTING FOR INDUSTRIALS 



GENERAL MANAGER'S 




SALES 




ITEMS 


QUANTITY 


VALUE 


MOTORCYCLES 


TD-DftY 


CUM. 


TO-DAY 


CUM 1 


OLD MODELS 














NEW 


























1 


TOTAL 
















BICYCLES 
















BACEQ 
















BOAD PACERS 
















BOAOSTEB 
















LADIES 
















SPECIAL 












1 


JOB 
































rCTTAL 
















PACTS OCDCCED 
















kc:pairs 
































GRAND TOTAL 












1 


SHIPMEN 


TS 1 




ITEMS 


QUANTITY 


VALUE 1 




MOTORCYCLES 
















OLD MODELS 
















NtW 
































TOTAL 
















BICYCLES 














RACEB 
















ROAD RACERS 
















ROADSTER. 
















LADIES 
















SPECIAL 
















JOB 












1 




















TCTTAL 
















RftRTS ORDERED 
















REPAIRS 
































GRAND TOTAL 












•- 1 





Form 2, General 



FINANCIAL STATEMENTS AND REPORTS 



349 



DAILY REPORT 



DATE, 



FINANCES 



ITEMS 



SANK BALANCE 



REGULAR {TRUST FUNDS 



DCPosrrs 



TOTAL 



WTTHDRAWALS 



BALANCE TO-DAY 



GRAND TOTAL 



ACCOUNTS RECEIVABLE 



NOTES 



TOTAL 



ACCOUNTS PAYABLE 



NOTES 



TOTAL 



■ DIFFERENCE 



NEW AGENQES 



BICYCLES 



MOTORCYCLES 



TOTAL 



TO-DAY 



NO. OF EMPLOYES 



CUMULATE. 



OTFICE 



TACTORY N.P. 



PROa 



TOTAL 



REMARKS: 



HIRED 



DISCHARGED 



ONF*\YROLL 



Si?e of Complete fc?rme^)<9i inches | 



= 



Manager's Daily Report 



FORMS 

PURCHASING AND RECEIVING 
(Forms referred to in Chapter III) 



1 . 






352 UNIFIED ACCOUNTING FOR INDUSTRIALS 



ROGERS MOTOR WORKS 

BRIOGEPOBT, CONN. 
TO THE PURCHASING AGENT 



PURCHASE REQUISITION 



NO. 1266 



WTE. 



.OCPT.Na. 



fOR P.O. NO. 



6.0. NO. 



R.aNQ. 



.REQ.NCL 



tWOLY ORDER 60005 LISTtD BEUM vyTTM StWMDnS 

soASTOBcigceivePW- 



.ASfOXOWS: 



xuvSr 

QKTt 



QUMtrmr 



WHTlPf 
WMTED 



QUAMTITY 
WHM10 



owmTY 

ONOTOER 



giwrnn 

TO BUY 



NOTE; IN MAKiNQ oirr this requbtion, 

•CVCR PUT rmo B0U6m r»>OM OFFtREIfT 
CDMCtRNS ON ■(>« S«MC SKtET. If IM BOUBT, fyiTr 

MMrt OUT stflWMTt wauismoH. '^"- 



PUR. OROCR Na. 
fROM 



ttscRiPTiON or rrtM 

OR SYMBOL 



Dwtor 

DELIVERY 
REQUIRQ) 



5i3e of form 6 « 6 inches 
Original whrhe. Duplicate ^How,Trtplicafe p»nk. 



CAT. NO. 
AND SIZE 



LAST 
PRICE 




NOnCC: EVERT RCQUISmON, NO MAHER BV WHOM 
MADC (ATT, MUST BE CHECKED BV T>C STORK RE- 
CORDER, AS TO QUANTmr ON HAND," ON ORDER, ETC, 
BEFORE PURCHASE 15 MADE. 



(SAME NOnCE AS ABOVE)^-^^ 



THIS COPY TOR PURCHASING AGENT 



(SAME NCmCE AS ABOVE )...^0) 



APPROVED. 



CHECKED BY 



tm COW ID Be RCTAINro W stores RECORCtR UWTL 60005 (gCEIva) 5TCPES RECORDER 



Form J. Purchase Requisition 



FORMS-PURCHASING AND RECEIVING 



353 



ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 
MESSRS 



PURCHASE ORDER 



P-NQ 



/C^ ^* The abav9 na mast be on 
""^^ evgry inmice and package 

DATE 



STORED RtQNQ 
Please ship fbrar account 10 the above address FO.B. ihefclbwtna 



tions given below •■ Ship via. 



QUANTITY 



DESCRIPTION OF GOODS 



Sije of Form 8i » JOl inches. 
Original white, Cbplicate yellow, 
Trijrficate pinK aOuodpuplrcatcblue. 



DATE OF 
DELIVER/ 
REQUIRED 



DISCOUNT 



NET 
PRICE 




^^'CE All goods «« held subject te>ourorxJer 

until we receive an invoice. No allow- BV_ 

IhADnOTASr^ "*'" ^ "^^^ ^ ^°*'"^ "^ Cartage. PLANT PURCHASING AGENT 

iMfvRTANT Acknowledge receipt of order and iFarw 

/ifr?7?.5 backondered advise by return mail. 

123456769 10 it 



12 n> lA 16 16_n_Jg_J9 20 21 K23 24Z52677?««»,« 



F 




NOTICE TVHS COPY TO BE ALWAV5 

KEPT IN PURCHASING HLE ^^ BY. 



PLANT PURCHASING AGENT 
APPROVED 



l23456789K )1ll2i3tASifenie ITWTy 



VWORKS MANAGER 



22 2324252627282930^ 




NOTICE This Copy fer stores Recorder lobe held 

hrhim until all checking is done and ^- 

«Tcn sent to accounting deparTmenh,.,.*^ 

_^ ^^ ^ 

>23456789ioui2r3Uffii6r7 ts 19 2o 21 



PLANT PURCHASING AGENT 



22 23 24 S 26 27 7X 7Q 30 S 




NOTICE THIS COPY FOR RCCEMNS 

CLERK. QUANTITY AND PRICE 
MUST NOT BE SHOWN 



PLANT PURCHASING AGENT 




1 2 3 4 5 . 7 e 9 K) n .. .~u ,5 « r; « ,. ^ ,, ;, a ,, ^ ^ n-^lTiSTi 

Form 4, Purchase Order 



m 



354 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



TICKLER CARD 



Wanted by Mr. 



Date 



19 



Subject 



RIc Ncxs. 



-1 5ije of form 3 «5 Inches 
"M-irrfed on Manilla Card 



FORMS-PURCHASING AND RECEIVING 



355 




PURCHASE ORDER N05. 



NAMt 



Sije of fbrm 3«5 inches 

Printed on white card, 

bcAh sides alike. 



Form 5. Purchase Order Tickler Card 



MATERIAL RECEIPT AND NOTICE 

ROGERS MOTOR WORKS 

BRlOaEPORT, CONN. 

STOREKEEPER AiSD PURCHASING AGENT CATE 

WE HAVE RECEIVED FROM . 

V»A 



TWE FOLLOWING MATERIA! 

ON ACCOUNT OF OUR PURCHASE ORDER NQ 



Iexp. bllno. 



TRANSPORTATION CHARGES 



AND PURCHASE REQX. NO. 





Form 7. Purchase Order Numbers 



Sijc of form 6 « ©i inches 
Original whiTc, Dupliccr*cycllw, Triplicate pink and 
Oue<)rup!icate Wue psoer. The last- line 00 -fbrm 
5.^iould read, onlXj^-'icuV^.: "This copy fbr Purchasing^ 
Agent.' On Triplicate: 'This copy for Stons* Recorder 
On QuadruplJCHTr ■ ' This copy Vied by Stones Keeper* 



T 



I 



NOrC : IN EVtRY INSTANCE QCXX)5 MUST Bt COUNTEOL 
WEIGHED OR N«ASUREO BCFQRC LISTING AeOVC. 
NCVCR PUT rrCMS FROM TVJO PURCHASE 
ORDERS ON ONE RCCEIVINQ TICKET 



RECEIVING CLERK 



THIS COPY HELD BY RECEIVING CLERK 



DATE. 



CLAIM VOUCHER 

ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 



NCL 



WE MAKE CLAIM AGAINST^ 



ON ACCOUNT 0F_ 



5i3e of form 5i « Si inches 
Originai white &Puplic3te_yellow paper 



JCDSJL 



CONSIGNOR . 



PURCHASE ORDER NO . 
SHIPPER. 



*, r 



INVOICE NOl 



RCCEIVINQ TICKCT NQ. 



DATE OF SHIPMCfCT, 

ENTERED- 

RMD 



.VIA. 



CAR NO. 



PURCHASING AGENT. 



Form 8. Claim Voucher 



Form 6. Maferial Receipt and Notice 



FORMS 

GENERAL STORES 
(Forms referred to in Chapter IV) 



358 UNIFIED ACCOUNTING FOR INDUSTRIALS 




FORMS^GENERAL STORES 



359 



GENERAL STORES REQUISITION 



YEAR 



MQ 



DAY 



TMia amce fon STOoes mulkji i 



quAmrry 



UNIT 



PRICE 



AMOUNT 



BLOG 



LOCATION 



FLOOR 



AISLE 



BIN 



Co 



5 



QUAffnTY 



A B c o c r Q 

ORDER Na 



SYMBOL 



STOCK 
BALANCE 



ARTICLE 



Sije of Fbrm 4*6 inches 
Origina! white. Duplicate .yellow. 




DELIVER TD DEPT. 



BEFORE 



C Si9 ^ 



RECEIVED THE ABOVE 



CHARGED IN STORES DEPT. 



J^aL 



CHARGED IN COST DEPT. 



Form JO. General Stores Requisition 



STORES CREDIT MEMORANDUM 



YEAP 



MQ 



twr 



TMi* aF»c« »<3« •noMcs Ktena omit 



QUANTITY 



UNIT 



PRICE 



AMOUNT 



BLD<j. 



LOCATION 



FLOOR 



AISLE 



A B C D C P G 
ORDER NO. 



BIN 



SYMBOL 



QUANTITY 



ARTICLE 



Si3e of fbrm 4*6 inches. 
Original white. Duplicate .yellow. 




OBTAIN rROM DEPT. 



BEFORE 



S^M. 



RECEIVED THE ABOVE 



CREDITED IN STORES DEFT. 



JM. 



CREPm ED INCOST DEPT. 



Form II. Stores Credit Memorandum 



36o UNIFIED ACCOUNTING FOR INDUSTRIALS 



SHOP STORES REQUISITION 

TO K PStSeNTtO TO SOB-STORCS KtCPCR. W OtM 
IS NOT ON HAND FORWARD TO STORES RCCOROCR. 



DCLIVER TD 



ON 



5t3e of" fbrm 4x6 inches 
Original whfhe. Dupticatgyllow 



QU^NTrTY DetlVtRED 



Pirr (XLY ONE tTEM ON THIS TICKET 



TAG 



RECEIVED TWE ABOVE, 



III 



CHARGE TD 



ORDER NQ 



FORMS 

COMPONENT AND FINISHED STORES 
XForms referred to in Chapter V) 



IN CHARGE 



Form 12, Shop Stores Requisition 



362 UNIFIED ACCOUNTING FOR INDUSTRIALS 






■f 




FORMS- COMPONENT AND FINISHED STORES 



'2 



Ci 



ro 



It, 



363 




1. 



I 



FORMS 

STORES— SPECIAL FORMS 
(Forms referred to in Chapter VI) 






366 UNIFIED ACCOUNTING FOR INDUSTRIALS 



Acrt No 


ASSEMBLY REQUISITION 

TOR PRODUCTION OQOER NO 

HATF 




Required 


Piece 

Pan 

No 


DELIVERY 1 


Date 


Quarrt-i-t>/ 


Unit 
Price 


Amount 












































































5t3c of fbrm 4 « 9i inches 
Original blue & DuolicaV onk carvr 








































1 


1 ' 




L ^ 


, , 






L^ 































































1 










































































Sar\ai 

























Form 15. Assembly Requisition 



I 



STORES-SPECIAL FORMS 



367 




i I 



368 UNIFIED ACCOUNTING FOR INDUSTRIALS 




STORES— SPECIAL FORMS 



369 



Date. 



ROGERS MOTOR WORKS 

BRI^DGEPORT, CONN. N° .63» 

STORE CLERK'S ORDER 



To the Superintendent: Please order made ttie fdbwing a^dca 

called for on Shipping Order No. 

for Stock. Maximum On Hand Minimum. 



QUA^fTlTY 



ARTICLE 



Sijc c^ Torm 5t«Si inches 
Original blue, Duplica-te pinK. 



Chief Stores Oerk 



Form 18. Stores Clerk's Order 



GOODS RETURNED TO US -, 
lEMQRANDlJM 
WE HAVE RECEIVED THE FOLLOWING. RETURNED fWM 



ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 



^Mu 



OWTE 
SHIPPED 



DflXC 
RETURNED 



SHIPPED 
ON 

ORDER NQ 



DESCRIPTION 



PRIME 
COST AND 
HANDLING 



5i3e of rorm 6 « St inches 

Original white. Duplicate pink 

and Triplicstg blue paper. 




RETURN 
VALUE 



LOSS 



- ij 



RECEIVIN6 CLERK 



CREDIT MESSRS. 



FOLIO 



ADDRESS 



CHARGE LOSS TD 



SIGNED 



Form IQ. Goods Returned to Us Memorandum 



FORMS 

PREPARATION FOR PRODUCTION 
(Forms referred to in Chapter VII) 



I r| ■ 



372 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



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FORMS— PREPARATION FOR PRODUCTION 



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FORMS— PREPARATION FOR PRODUCTION 



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DRAWING AND 1 RACING CARD 


DPAWINrt Nn 


CARD NO 




NEGAT 


IVF NO 


TITl F 






PIECE NO. PAFTT NO. UNIT NO. MODEL NO. 


PENCIL SKETCH 




MADE 
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DATE 


TIME 


COST 


DISPOSITION 1 


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ALTERATIONS 










Sije of Form 4x6 inches | 


TOTAL 












1 






INK SKETCH ] 


FIRST COST 
























ALTERATIONS 




















TOTAL 




















CHARGED TO 

(OVER) 



REMARKS •• 






PENCIL SKETCH 


YEAR 


VALUE 


YEAR 


VALUE 


YEAR 


VALUE 


YEAR 


VALUE 


YEAR 


VALUE - 











































TRACING 










1 1 1 












This the reverse aide of 

the above. 
' 1 ' 1 ' 




















INK SKtICH 










































1 



Form 23. Drawing and Tracing Card 



n 






376 UNIFIED ACCOUNTING FOR INDUSTRIALS 













1 


CAPn NO 


PATTERN RECORD 


► CARD 

PATTERN NO 


NAME & DESCRIPTION 


MADE FOR PIECE NQ PARTS NO '""'^ '^ 


PATTERN DATA 


COSTS 


CHARGED TO 


DATE MADE 




COST or MATERIAL 






PRO. ORDER NO 


BETTERMENT 
ORDER NO 




COST OF LABOR 






SALES ORDER NQ 


DRAWING NO. 




COST OF TOOL TIME 






JOBNQ 


FLASK NO. 




OVERHEAD 






INVEN. ACCT. NQ 


PLA5K SIZE 




lUTAL COST 








FOLLOW BOARD 




MADE BY 


KIND OF MATERIAL 




BOUGHT FROM 


Sije of Tbrm 4'«fe inches | 


NO. OF RECES 




LOFT NO AISLE NO. SHELF NO 



Form 24. Pattern Record Card 



PAI ItkN LOCATION CARD 

PAIltRNNO 


DATE 


LOCATION 


DATE 


LOCATION 


date: 


LOCATION 


















































5i^e of fbrm 4 »6 inch(-«ri 










|j 








































































J 



Form 25. Pattern Location Card 



I' 



FORMS 



MACHINE AND TOOL STUDIES 



(Forms referred to in Chapter VIII) 



2,yS UNIFIED ACCOUNTING FOR INDUSTRIALS 




FORMS— MACHINE AND TOOL STUDIES 



379 



CnMPnWFNT NO 


ENGINEERING DIVISION 




FDD «^FT-l ID NO 


nPFDATlDN 


TOOL KEY CARD 
ROGERS MOTOR WORKS 

BRlDGEPOkl, CONN. 
HATF 




nOAWllMrt NO 


ITEM 


1«,«MIF NO 


DATA 1 


MACHINF TO BE lJ5iEO ON 


5L 
W 

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FE 
LU 
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JOFACF «iPFFn 


rOMPONFNT TI-) F« USFD OM 


VX HFPTH nF n IT 


MATERIAL TO BF. PPOrF5i.SFn 


\X WinTH DF n IT 


AVa NO. PIECES TOOL WILL MAKF 


NftTwnFnn 


AVG. NQl PlECF-S TD ONF fiPINO 


Fn 


AVG. NO. OF r,piNns 




FWICANT 


PIECES PER HOUR FROM TOOl 


■MAPK.S 


.•^ALVAHFn m 






SALVAGED FPOM 








SUPERSEDES SI JPFPSEDFD RY APPPnVEH 


5t3© of fbrm 4«6 inches | 




Form 27. Tool Key Card 



COMPONENT 1 
OPERATION 


sin 


ENGINEERING DIVISION 


^fT-l p NO 1 




TOa SET-UP KEY CARD 














ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 
OATF 


DRAWING Na. 




KIND OF MACHINE USED 


ISSUE N0._ 




SURFACE FEET PER MINUTE 


RECee COMPLETED 




STOCK 


THREAD 


DRILL 


PER HOUR 


PER 8 HOURS 
















SYMBOL 


DRAWING 
ISSUE 


NAME OF TOOL 


QUAN- 
TITY 


NO. PIECES 
PER GRIND 


NO. GRINDS 
PER TOOL 


AVG PIECES 
PER TOOL 
















































Si^e of Form 4 « 6 inches | 






































SiJPERSEDF'^ *a iPFD«>FnFn r*' APPc?fAffT> 1 














1 



Form 28. Tool Set-Up Key Card 



38o UNIFIED ACCOUNTING FOR INDUSTRIALS 



COMPONENT NO. 
OPERATION 



DRAWING NO. 
ISSUE NO 



CNGlNtCRING D<VlSION 

FIXTURE & DIE KEY CARD 
ROGERS MOTOR WORKS 

BCtDGEPORT. CONN. 
DATE. 



PATTERN NO. 



SYMBOI 

TOR SCT-UP NQ_ 



FLASK NO. 



KINO OP MACHINE USED ON 



PteCES PtP HP. 



ITEM 



SALVAGfOrROH SALVAGED D 



GENERAL DESCRIPTION. 



Si3e of fbrm 4 ȣ inches j 



SUPERSEDES. 



.SUPERSEDED BC 



.APPROVED 



Form 2g. 'Fixture and Die Key Card 



fli 



FORMS— MACHINE AND TOOL STUDIES 



381 





U 

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382 UNIFIED ACCOUNTING FOR INDUSTRIALS 



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FORMS 

SCHEDULES AND CHARTS 
(Forms referred to in Chapter IX) 



k 



388 UNIFIED ACCOUNTING FOR INDUSTRIALS 





















ISSUE 
CHEDULE B 

:heoulc El 


Kin 


MPrj noDPO NO 


MANUfACTURlNG ORDER 

RATF PFOnivY fV 


rr^mc. 


QUANTITY TO 5rHC:CM.» f" 


_ NO. oe^ys RUN , . 


» 


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1 


WEEK ENDING 


NO. DAYS 


SCHEDULE 


MADE 


DAYS 1 


MONTH 


DAY 


IN 
WEEK 


CUM. 


QftlLY 


foft' 

WEEK 


CUM. TOTAL 


FOR 
WEEK 


CUM-TOTAL 


AHCAO 


iSEHIND 


MAY 


6 


6 


§ 
















JUNE 


13 


6 


T2 
















20 


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18 
















27 


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3 


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29 
















JULY 


10 


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17 


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41 
















24 


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47 
















1 


6 


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AUGUST 


8 


5 


58 
















15 


6 


64 
















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2 


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106 
















OCTOBEC 


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111 
















16 


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117 
















23 


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123 
















30 


6 


129 
















7 


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135 
















NOVEMBER 


U 


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1A1 





Sixc of fbrm- Ti «» inches L 








21 


6 


147 


•—I 














28 


6 


1S3 
















4 


6 


159 
















OCCEVIBER 


11 


6 


165 
















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1 


171 
















25 


5 


176 
















2 


^ 


182 
















1 - ■_ _ . ___1 


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188 
















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6 


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SCHEDULES AND CHARTS 



389 



NO- 



ENGINEERING DIVISION 

ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 

PRODUCTION SCHEDULE 

DATE. . 



SYMBOL. 



TYPE 



COMPONENT NO. 



TOTAL REQUIREMENTS. 
ON HAND 



ON ORDER. 



BASED ON MANUFACTURING ORDER NQ 

RATE PER SCHEDULE BEQINS. 



BALANCE TO SCHEDULE. 



NO. DAYS RUN. 



SCHEDULE ENDS. 



TIME PERIODS 



Week Ending 



MONTH 



StPTCMBER 



OCTOBER 



D<kTt 



16 



23 
30 



NaPays 



MIKCCK CUM 



13 



25 



31 



SCHEDULES 



Schedule 



ran«HK 



Produc+ion Orders Issued 



No. 



OCTt OUAWriTV 



Sije of Tbrm - 7^ "I? inches [ 



Made 



CUH.TOTV 



"C^ 



KHIND 



^~ ^ 


[— rt-] 


1 — " — 1 


-Tsr 


r~ — 1 




r 


_— 






^ 


■ ^ 






21 


6 


273 






















2S 


6 


279 






















August 


4 


6 


285 






















II 


6 


291 






















18 


6 


297 






















25 





303 






















SCPTCMBCB 


1 


6 


309 























Form 36. Production Schedule 



» 

ini' 



Form 35. Manufacturing Order 



390 UNIFIED ACCOUNTING FOR INDUSTRIALS 



NCL 



CNGINEECINC CTV1SK3N 

ROGERS MCrroC WOCKS 

BCiOGEPOCT, CONN. 

PURCHASE ORDER SCHEDULE 



CATC. 



SrtMieou 



TYPE. 



MATERIAL 



TOTAU RCQUIREMCNTS. 
ON MAND__ 



Ail fxxchase cnder schedules must prwidc for de- 
livery days ahead of manufacturing schedule. 



ON PURCHASE OROCR. 



BALANCE -fO PURCHASE. 



BASED ON MANUFACTUPING SCHEDULE NCL 

RATE PER SCHEDULE BEGINS- 



Na OAXS RUN. 



SCHEDULE ENDS- 



TIME PtRtOOa 



VXteek tndinq 



SCPTeMBCR 



OCTOBER 



g 



30 



Ha Days 



AinusT 



SCPTEMegg 



13 



19 



25 



IL 



M 



21 



28 



J5_ 



25 



SCHEDULES 



Schedule 



oai-nTM. 



f\jrchaae Ortlers Issued 



0*T« 



QUdirrrrv 



5i3e of Tbmn -7J «t2 inches 
E3 



Received 



PSRtllCZX 



Days 



RHINO 



»L 



273 



2TB 



^sr 



291 



297 






Form J/. Purchase Order Schedule 



rrcM Component 



Operations 



TIMC {J\G€0 DAYS 



SCHCOULC MO. S 



CHRONOLOGICAL CHART 

Rate Per OAf loo order ho.- 278 



SEASON 1916 



JAN '^ AMY 



e li i2 t* 



» u i» a* 




portent Schedule 



INTENTIONAL SECOND EXPOSURE 



rrcM Component 



TiMC LAO 60 DAYS 



SCHCDULC NO. 1 



CHRONOLOGICAL CHART 

Rate Per Day loo order no.> 278 



SEASON 1916 



OPERATIONS 



« IS 22 n 



JAM'JkNV 



i ti n M 



APRIL 




:HijfpiiMfetmi;i 



Form sS. Graphic Chart— Component Schedule 



rrcM 



tinr A - WBKLY SCMIEDUUE 

• 8 - Vf*r9 ahkad c^ behind scheoule 

, r - TOTAL UNITS AeSBMBLEO 
SCHEOULC NO. 



CHRONOLOGICAL CHART 

UNE D- TOTAL ^OOO UNITS 

pate: Per PftY IQOO 



ORDER NO 



U»ie E - PERCENTftSC C SOOO UNITS 
, p _ flvERASE NO. OF EM PUOreCS DAILY 
• G - NO. or UNITS, OUTPUT PER MAN. 



SEASON 




Form 39. Graphic Chart— Unit Schedule 



INTENTIONAL SECOND EXPOSURE 



ITCM 



tiNC A - WEEKLY Schedule 

• B - D«V5 Ahead o«r BEHIND SCHeOULE 

• C - TOTAL UNITS A6SBM0LEO 

SCHEDULE NO. 



CHRONOLOGICAL CHART 

DNE D-TCTTAL^OOO UNtTS 

RpaB Fen pay looo 



ORDER NO 



Uwe £ - PERCENTftSE C SOOO UNITS 

, p - AvERASE NO. or EMPuoreES Daily 

• G - NO. or UNITS, OUTPUT PER MAN. 



SEASON 




:ii Hl aji ti: ^a ^^^^i''^^^^j^^^^ 










;:^;;i:n:;;n:-r:hr:-i^;:""-|;;'::-ii|:-":^- 1'--: -^p; 






;•!; .:: 












^^-^i#r^ 






,4:,-..; 



. ^ ..... . , , 



u'j-*;-: 



-i.;:-;.*; 









mmm 



^:::i::::^ 



..^I^VIWIAVI'^VM:,:,, 



-ti^-n.i.^nrnHHi- 






■rrr" 












u;;.:;,:*;;::!::;.': t^-'tfePHtttil^SSirSIiIi: :rr;:'irlt:tin:ht! -^.o^ -::^x:i:t;:- -'-l-^ ""i ' ""' -rr-^ 



tMSiaH?fe^i^^^^i^^ii^lM^2^..3i^^^ 



iiii^iii;n ui ;: i; ; ; li-ii-; ; : J : "" : Liiii 



illi^ *!g*#!!!!ill ' '!>',J^ ;-: :• -r:!--r'- -* rr:-^ 



F ' iJiliiiilui!!! iniji 



iSii 



-:-hu~ 












wSC7C<S"»J •3^-'?rT' *it: i ! ■ .'i*|!'.Tr^ 



irf;^^|ri||pp^ri:lT:;^^ 



rr.tr 



■>**'"*♦ I---':-. :r-t-t-- -. (■•-■• 









1 1 1 1 ^ ■ ■ ■ - - • 



-lH^;i^ 



Trrrrr 



trrr wi'tWKWrf trrrr T 
















.uu-u 



iBii 



rrr_ 



rrrtxt 












n 



JH 



J& 



w$-mmm 



ISiiii 






I::. 






; :::; ::::■:. ::::r: ji 






■.|::;:u4!t:;j 



;.* 



:-:::) 



rrn-rr: 



frrHf^jn:iJTrT|3:;|:r::: 







;-:4Tr!:;:hHh! Iffii; ;;:-;:ii:-::: 



M»Mj 



li::a--Mr-ifi 






fe 



ililii 



M:.:r:;r 



fiiU 



.iiiiii 












iniilijirii illli 



;;t;i: 



tttrtr 






Form 39. Graphic Chart— Unit Schedule 



r i T iiiii m-TT lii T 'lTi 1 



JW ■ 



FORMS 



RELATING TO PRODUCTION 



(Forms referred to in Chapter X) 



392 UNIFIED ACCOUNTING FOR INDUSTRIALS 



il 



IM 



if 



If 1 



DM1E. 



.SURNQ. 



CHARGE TO. 



TO BE CXIMPLCTCD NOT LATER T>1AN 

LABOR MATCRIAI OVERHEAD 



. PPODUCTION ORDER NO. 

SALES ORDER NQ 

BlU OF MATERIAL NO . 



TOTAL COST. 



-COOT or ONE . 




ThiaG ayymuatbedriiygredat-oncgloChief Slorga Clerk. No 
moterial can be dflivered Id this order ewrpt by pfwentation 
of proper nex^tsrt-Bn If in excess of quontity nequined. nxist 
be O.Ktt. by proper authtsrrty j ^ - 



APPROVtO- 



xr= 




m 



This Copy mujrt- be rrtained in PRODUCTION DcparhDenf 
and filed ty Hem Number 



TOTAL RfQUIREO 



CU\TE PEQUlftCD 



STARTED 



lotNft 



Mt 



Quan. Cumutetiw 



FINISHED 



CMb 



Quan 



Cumulative 



STARTED 



LotNa 



DMe 



Hjarv 



Cunnilativie 



8h«rse aide of quadruplicate of aboM; fbrvn. 
Iffanilla cand. Stre of rprm 5 x S" inchea 




FINISHED 



Dat« 



Quan. 



Cumilati^T 



Form 40. Production Order 



FORMS RELATING TO PRODUCTION 



393 



Oflcrc. 



_ SUP NO. 



OlARGETO. 



BETTERMENT OROtR' NQ 

AUTH0RrZAnC3N NQ BILL OF MATERIAL NOl_ 



TO BE COMPLETED NOT LATER THAN 
LABOR MATERIAL 



OVERHEAD. 



_,TOTAL cost. 



APPRC3VED' 




51:^6 of" fbrTn-5'8 inches Y 




T>ii5 Copy must be delivered at once to ttie Department 
wtiich is 1d do the work, and v^tien finished, nchmncd 
to COST Oepar+menf . 



Form 41. Betterment Order 



394 UNIFIED ACCOUNTING FOR INDUSTRIALS 



Ij 



FORMS RELATING TO PRODUCTION 



395 






OATt. 



.REPAIR ORDER NO. 



CHARGE TO_ 



DONE BY DEPT. NOL. 



f=ORDEPT.NQ_ 




Si^e of rorm- S'8 inches h 



This Copy musf be delivered at once to the Department 
which is to do the worK. and when finished, sent to 
COST Dcpartmenh 



This Ccipy must be delivered at cxice to COST Department, 
which will immediafely cjpen up Distribution Accountai 



This Gjpy !nu^^ be deSvered at once to Drafting Department, 
which will immediate^ make Drawing*. 



This Copy must be dcfivered at once to the Axounting 

Department. 



Form 42. Repair Order 



i 



/tracing 

TAQ 

Rere Nn 


( 


r\\ "fobem! 
Vy y with! 
._^ PQNc 

Date to be 
Finished 


>d< 
nl< 


:ou 

I. 


•^ 


Quan.StorheH 


r> 


Date 
Started 






Tbslag mus* bt altsched to W «♦ <irst opfration and rem«in wttti 'Hi 
aeitK«l lot through A\ operations till mived in storw as floished. 
This lot mvist not be split up nor nmbined with another k*. 


NO 


MACM 


M«CM 
NO 


oepT. 

NO. 


OUAN- RECOV 
IITY FROM 
EtCa ttPWiS 


RfJCCTED 


0«tt 


iwrec- 

100 


FWRCr. 


x>v 


A 




















6 




















t 




















^ 




















T 






5i3e of form 3? »6«inche5 

Printed ori Manilla Tag card. 






Fj 










T 




















A 




















J 




















K 




















L 




















M 




















\i 




















P 




















Stock 


Upon completion, mettrial used must be dtlHWtd to StDttj-ketper and 
Ihd lag signed and deli^red It once to Stores ReoTd Oerti,1hen tc Soutinj CbV 

No. of Pieces Rer^ivrrl 


BinNn 


rtav 








3tono-l<Eeper VeaarAOcA^ Routing Clerk | 



II 



/ 


/ 








( 


0^ 


) 






\ 


OP 
NO. 


MAOt 


MACK 
NO. 


ocn. 

NO. 


QUAN- WCOV. 
IITY fROM 
RECT) REfAKK 


BEJECTtD 


DATE 


mstc- 

TOR 


fORBEf. 


SCRAP 


T 




















R 




















s 




















T 




















u 




















V 




















yy 




















X 




















V 




















z 




















AA 




















nt^ 




















a 










DO 




















EE 






































Q^ 




















HH 




















Sttock 


Remarks 











hi 

V. 

hi 



^ 



^ 



I 



396 UNIFIED ACCOUNTING FOR INDUSTRIALS 



DAY-WORK PRODUCTION TICKET NO 



OflTE 
ttSUCO 



tWTETOBC 
COMPLTTED 



OCPT. 
NQ 




PROO. 
ORDER NO 



MACH. 
NO. 



MAN'S 
NQ 



QUANTITY 
WANTED 



PIECE 
NO. 



PIECE 
NAME 



TIME 
ALLOWftNCE K 



U 



MOVED rpOM 
DEPT Na 



MOVED FROM 
MACH. NO. 



MOVED TO 
DEPt NO. 



MOVED TO 
MACH. NO. 



Rcrr.NO. 



INSTRUaiONS 



SPEED FEED 



f>ijc cjf Tbrm 4«6 inches 
Original - w^ii+c paper. 
Duplicate- manilla card. 



NO. OF PIECES 
RECEIVED rOR THIS 
OPERATION BY 
WORKMAN 



THESE SPACES TO BE FILLED IN BY INSPECTOR 
REJECTED 



OfiTC FINISHED 



FOR REPAIRS 



FOR SCRAP 



GOOD 



TOOLS REQUIRED 



INSPECTOR 



ThijTictet mu3^ be retained until Lot spedfied is completed and then turned in at once to PVrxJuctlon Departmert 

Last (tej rf each month si TiOkfS must be turned in and if Lot e uncoriplettd must be so sbmptd and 8^ 



l\ 



TIME ON DAY- WORK TICKET NQ 


STOPPED 


STARTED 


TIME 1 


REMARKS 


WQULAR 


OVER 1 


















































hr 1 




Tbrm shown above. | 
































-^ 
















TIME USED 












HOURLY RATT 




COST REG. TIME 












CVBTTIME HOURS 




BONUS EARNED 














TOTAL COST 












1 



I 



Form 44. Day-Work Production Ticket, including Time on 

Day-Work Ticket 



FORMS RELATING TO PRODUCTION 



397 



RECE-WORK PRODUaiON TICKET NO. 




ISSUED 



DATE TO BE 
COMPLETED 



DEPT. 
NO. 



MACH 
NO. 



MAN'S 
NQ 



QUAtVTITY 
WANTED 



PIECE 
NO. 



PIECE 
NAME 



MOVED 

FROM DEPT. NO. 



MOVED 

FROM MACH. NO. 



^m^. 



NO. 



MOVED TD 
MACH. NQ 



ROT. NO. 



INSTRUCTIONS 



SPEED FEED 



Sije of fbrm -4«€ inches 
Original-white paper- ailing red 
Puplicgte-buffcard- ruling red 



NO. OF PIECES 
RECEIVED FOR THIS 
OPERATION BY 
WORKMAN 



THESE SPACES TO BE FILLED IN BiC INSPECTOR 
REJECTED 



DSTE FINISHED {fOR REPAIRS 



FOR SCRAP 



GOOQ 



TOOLS REQUIRED 



INSPECTOR 



TIME ON PIECE-WORK TICKET NQ 


STOPPED 


STARTED 


TIME 1 


REMARKS 


RBJULAR 


0*'CR 1 
















































Brverse oide of Duplicate of the _ 




Fbrm shown 8bov« 














































SCHEDULE 
TIME ALLOWED 




• 
TIME USED 












MACH. HATE 




AMOUNT EARNED 












PIECE RATt 




.0^ 












MANb HOURLY R*TE 


















1 



Form 43, Piece-Work Production Ticket, including Time on 

Piece-Work Ticket 



} i 



II 



398 UNIFIED ACCOUNTING FOR INDUSTRIALS 



PREMIUM PRODUCTION TICKET NO 



PROD. 
ORDER NQ 



0«TC 
ISSUED 



CATtTOBt 
COMPLETED 



OCPT. 
NO 



MACK 
NQ 




MA^45 



QUANTTTY 
WANTED 



PIECE NQ 



PIECE NAME 



STANDARD 
TIMEEA 



TIME 
K ALLOWANCE H. 



M. 



MOVED rPOM 
DCPT. NO 



MOVED fROM 
MACH NQ 



MOVED TD 
DtPT. NO. 



MOVED TD 
MACH. m. 



HOT. NQ 



INSTRUaiONS 



SPEED fKD 



TOOLS REQUIRED 



Sije of rbrm -4*6 inches 
Original - whrte paper- red ruling 
Duplicerte - buff card - " 



NQ OF PIECES 
RECEIVED TOR THIS 
OPERATION 
W yKJRKMAN 



THESE SPACES TD BE FILLED IN BY INSPECTOR 
REJECTED 



DWt DNISHEO 



rOR REPAIRS 



rOR SCRAP 



GOOD 



INSPCCTDB 



TIME ON PREMIUM TICKET NQ, 


STOPPED 


STAJ3TCD 


TIME 1 


REMARKS 


KGULAR 


<?^ 1 
















































UBversc side of Duplicaie of i\ 
form ahov/nfibovfe 


yc - 














- 




























TIME ALLOWED 




TIME USED 












LESS 3P0ILAQC TIME 




COST RCa TIME 












TIME 5AVCD 




PREMIUM EARNED 






— < — 






HOURLY RATE 




TOTAL COST 












— » 



Form 46. Premium Production Ticket, including Time on 

Premium Ticket 



FORMS RELATING TO PRODUCTION 



399 



DAILY DAY-WORK PRODUCTION TIME SLIP 

rod TIME ON DAILY DAY-WORK PROD TICKET NQ 




PROD OPEPATION 
ORDER NO, NO. 


LOT 
NO. 


PIECES 

MADE VIACH.NO. UtWI'. NO. 




MAN'S NQ 


STOPPED 


STARTED 


ELAPSED 
TIME 












REGULAR 
TIME 














S13C of rbrm- 2 J «6 inches 
Printed and ruled in black 










OVER- 
TIME 














THESE SUPS MUST 0-*<- 
BE TURNED IN DAILY 


FOREMAN 
CLERK 



Form 47. Daily Day-Work Production Time Slip 



DAILY RECE-WORK PRODUCTION TIME SLIP 

FUR TIME ON DAILY PlECE-VyORK PROD. TICKET NQ 


PROD. 
CRDCRNQ 


OPERATION 
NO. 


LOT 
NQ 


PIECES 

MADE MACH. NO. OEPT. NO. 


MAN'S NO. 


STOWED 


STARTED 


EIAP5ED 
TIME 












REGULAR 
TIME 










^3? of Torm - 2^ "6 inches . 




Printed and ruled in green 






CVCR- 
TIMC 












THESE SLIPS MUST OK. 

BE TURNED IN OMLY HDRCMAN 

CLERK 



Form 48. Daily Piece-Work Production Time Slip 



400 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



1.1 



DAILY PREMIUM PRODUCTION TIME SLIP 

FOR TIME ON DAILY PREMIUM PROD. TICKET NO 
MAOe MACH.NO. oepT.Na 


PPOO. 

OPoeoNO. 


OPtWATtON 
NO. 


LOT 
NO. 


MAN'S NO. 


STOPPCD 


STARTED 


ELAPSED 

time: 












REGULAR 
TIME 










5i je d( form - 2 J »6 inches 




~ Printed and ruled in red 






CVCR- 
TIME 












THESE SLIPS MUST OX- i..^^^*.. 
BE TURNED IN DAILY 'V*^'^ 

— CLEW'S 



Form 49. Daily Premium Production Time Slip 



DAILY DEFECTIVE REPAIRS TIME TICKET 

RATE DCPT NO. ^^N'S NQ 


5TOPPCO 


TIME 


AMOUrfT 


NO, OF 
PIECES 


PIECE 
NO. 


PROD. 
ORO. NO. 


STARTED 








[_— 








STOPPED 
















STARTED 
















TOTAL 














DESCRIPTION OF WORK AND REASON FOR REPAIRS 


1 : : — r- — : r 







S13C of form - 4 • t) incncs r 
Prin+cd on blue card | 





Form 50. Daily Defective Repairs Time Ticket 



] 



FORMS RELATING TO PRODUCTION 



401 



.DAILY WAITING TIME TICKET 


MAN*^ NO 




PFPT N*^ 




REGULAR TIME 


DESCBIFTIC»N OF 


WORK 


STOPPED 


STACTTEO 




TIME 
USED 




0^fll^TIME ■ 

STOPPtD 




STARTED 




TIME 
USED 






PF(31 n AD TIMP ♦ 




(VTRTlMr ^ 






•^rjr^y, cr^T * 


THESE TICKETS MUSI 


5i3e of Form - 4 « 6 inches 
Printed on manilla cord. 


FOREMAN 


BE. TUKNtD IN DAILY. — | 



Form 51. Daily Waiting Time Ticket 



DAILY BETTERMENT TIME TICKET 



MAN'S NO.. 



BETTERMENT ORCCR NQ. 



OEPT. NO.. 



REGULAR TIME 

STOPPED 



DESCRIPTION OF WORK 



STARTED 



O^i^RTlME 



TIME 
USED 



STOPPED 



STARTED 



TIME 
USED 



NO. HOURS REGULAR TIME. 
NO. HOURS OVERTIME 



.HOURLY RATE. 
.HOURLY RATE 



.REGULAR TIME »_ 
OVERTIME *_ 



THESE TICKETS MUST 
BE TURNED IN DAILY 



5136 cf form - 4 « 6 inches 
Pri ntp.d on manilla card 



TOTAL COST *. 



FOREMAN 



Form 52. Daily Betterment Time Ticket 



402 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



' i 



DAILY REPAIR TIME TICKET 



REPAIR CJROCRNO. 



VlA^45Na. 

OCPT. Na_ 



REGULAR TIME 

STOPPED 



STARTED 



Cfi/EKrTlME 



TIME 
USED 



STOPPED 



STARTED 



TIME 
USED 



DESCRIPTION or WORK 



NO. HOURS REGULAR TIME. 
NO. HOURS OVERTlMe 



HOURLY RATE. 
HOURLY RATE. 



.RtQULAR TIME*. 



OVERTIME 



"THESE TICKETS MUST 
BE TURNED IN DAILV. 



Sise of Eorm - 4 » 6 inchca 
Pnnted on manilla card. 



TOTAL COST ♦. 



-fDRCMAN 



Form 52. Daily Repair Time Ticket 



DAILY PRORATING ORDER TIME TICKET 

»w1an!5 no.. 



PRORATING OROCR r«L. 



OEPT. NQ. 



REGULAfe TIME 

STOPPED 



STARTED 



CNCRTIMC 



TIME 
USED 



STOPPED 



STARTED 



TIME 
USED 



DESCRIPTION OF WORK 



vex HCXJRS RCaULARTIMC 
Na HOURS CVCRTTMC-^. 



.HCXJRLY RATt- 
.HOURLY RATE . 



.REGULAR TIME*. 



OVERTIME.*- 



Tx^orrs MUST 

TURNED IN OMLY 



■Pri 



nted on manlllo cand. 



TOTAL OOSTI. 



.TOREMAN 



Form 54. Daily Prorating Order Time Ticket 



FORMS RELATING TO PRODUCTION 



DAILY NON-PRODUCTIVE LABOR TICKET 



MAN'S NQ. 
DEPT. Na_ 



REGULAR TIME 

STOPPED 



STARTED 



OVERTIME 



TIME 
USED 



STOPPED 



STARTED 



TIME 
USED 



DESCRIPTION OF WORK 



NO. HOURS REGULAR TJME- 
NO. HOURS OVERTIME , , .. 



HOURLY RATE. 
HOURLY RATE. 



-REGULAR TIME*. 



OVERTIME *_ 



THESE TICKETS MUST 
BE TURNED IN DWLY 



Si3e of Form - 4 « 6 inches 
Prin-ted on manilla cond. 



TOTAL COST 1. 



403 



-fOREMAN 



Form 35. Daily N on-Productive Labor Ticket 



4 



I 




SUPPLEMENTARY TAG 

lots mus» not be ap'''^ ficept on emcraency, and 
must not be combined with another Br 

piece No ^PQ 

fert of Lot- No 



Taken from Lot for Operation Nol 

Op Name 

Date By wtlon^ 

Taken from Oept No 

Reason 



Balance of operations and routing must be 
copied below noTi original Tag 



MACH 



MACM 
HO. 



Dtfn 

NO 



QUAN 

Rtrti 



fORdO' SCRAP 



RtJECrt.0 



OATC 



IN5«C- 
TOR 



5136 of rorm- ;^ I fei inchea 
Printed on Red Tog cord 



Upon completion, material must be delivered to 
Stonts-keeper and thu tag signed and delivered a* once 
te Stores Record CierK.men to Schedule Clerk. 

No. of Pieces received 

Bin No Date 



Stores- keeper . 
Record Qcrk 



Indicares a 
gneenbond 
across tog 



Form 56. Supplementary 
Tag 





RCJECTtOPOft^ 
SCRAP 



Dote Rejected 




Lot No 



l!t)tct«l 



Piect 
Na 






Pejeded ot Qperohon 



No. 



Nome 



Different pieces or ttie some pieces naquinng 
diffcrmt repairs or mode on differoTt production 
orders musf not be put on ttiis tog. 
REASON FOR RCJECrriON 



Sijc of Form - 3g « 64 inctlCS 

tVinted on Manilla Tog Card 



Rfecetvcdabowe, 
fbr5crop 



.Kecea 



Date. 



EntCnedifProd. 
Onl Record _ 



Stores- keeper 



fntChg.to 
Scrap Actft . 



Oerk 



aerk 



Form 57. Rejected for 
Scrap Tag 



404 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



© 




Repair Tag 



REJECTED 

fective: repai 



ected 



^1^3 



LotNQ 



No of 
Pieces 



Rece 



Bcjtcted i No 



Mode on 

tonJerNa 



BjjediKJ 3t Opera+ion 



No 



Name 



REPAIRS RCQUlBtO 



5<3e of fbrm - 34 » 6i inches 
Pnnted on Manilla Tag Card 



fitfeirs ° tele 
parted 



Oept. 



Inapedw 



Aftff- nepsirs hare ben made, *c pifcn cowrfd ty *is 1s9 mjy b( 
cntined a^ a trguiar lot of amc Anj Art Na Id oK^ oprahcnj If so 
dew *»ta8ii>BtbtWa)in^bilwr»idi>)n»d till cnttfcSdieUeOtTii 



r coMBiNeo wrm pcgulab lot 

<r SAME P»?00UCTlON CCOCR NO 



Repairs jitoflffyco 



Combtncd 
with lot Wo 



fix Optratipn 



Ho; 



Hame 



^jrpMwi 



Bepatrs 
ttoedOK. 



Date 



Inspector 



If operstions an * be f niihnJ without combining with rtg- 
utar lot. UK rnerse si* ftr Iteuting and Inspection CtiecK. 



icstesa 
band 
across tag 



' 


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— Re«r5e Side of Rxm at the Left. \~ 






^ 




























































































































































RemerKs- 


6jgV'«dand(»««d*ot«lB5iim8K5rdOtrV.»hrntB5(ttijJfCkrii 
^to of Pi#r« Ppcpivwt 


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1 


5tDn=rkeeper Reconl Cterk | 



i^orm 5(?. Rejected for Defective Repairs Tag 



Sub- Order Station 



STOCK T?OOM 




p • PlNl5HeD WORK 
ROOCM MAT'L 
SlCNCO POKM 

J • I>All.V T1M£ CARO 




Form 50. Order Control Chart 



Form 60. Order Control or Planning Board 



ii 



FORMS 

RELATING TO LABOR 
(Forms referred to in Chapter XI) 









4o6 UNIFIED ACCOUNTING FOR INDUSTRIALS 



ROGERS MOTOR W0RK5 

BRIDQePORT, CONK 

APPLICATION fOR EMPLOYMtNT. 



Nanieinfull 



.Dote 



.19. 



Add»T5S 



Trade. 



Nationality -»Place oF Birth _ 

If of fcreign Birth, how long have you been in United States _ 
Natural i3«cl Harried or Single 

Prtviously in our employ 1 

Experience ______«______^_____ 



Age 



. No. of Children _^ 



Date. 



.Dept. 



fefcTtnce. 



513* of rcirm - 4. » 6 inches 
Printed 00 Manilla cond 



Name of Relatives employed by Rbgers Mdor Works . 



DO fJOT WOTE BELOW THI5 LINE. 



Pafe Employed 

Date Rc-€mployed_ 



.Dept. No. 
_Depr.No.. 



-Application No. 



.Rlc Na . 



Dale Be-emplo^. 



.Dept. No._ 



INDICATE BELOW THE POSITIONS YOU HAVE HELD. 
GIVING IN THE TOP SPACE YOUR LAST EMPLOYER. 




CMPLCfYCR 


WSITIONS 
YOU HAVE HtLD 


APPROXIMATE 

DATE OF EMPU)YME^rr 


WAfiCS 


FPOM 


TO 


NAME 










ADoerss 


NAMC 


















Reverse side of form shovm above 




ADDRESS 










NAME 










A0ORt55 


NAMt 












At30etSS 


Are you ^ 
How soon 


(Orkino o^ crescnt' 




canyx) report fix* 


«-irW7 








^ov«J_J 



Form 61. Application for Employment 



FORMS RELATING TO LABOR 



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FORMS RELATING TO LABOR 



409 



Reference Inquiry Letter 
Rogers Motor Works 

File No 

Bridgeport, Conn., 191. , 



Application No. 



* *.* • ' "'V h^s filed an application 

with us for employment and gives your name as one of h.... past 

employers, working under 

We shall very much appreciate an early reply to the questions on' the 
back fold of this sheet, and thank you in advance for your attention 
to the matter, which will be treated confidentially. 

Very truly yours, 

Rogers Motor Works, 

By 

Form 63. (a) Reference Inquiry Letter (first page of fold). 
Size of folded page, 6X8 inches 

Rogers Motor Works 

Bridgeport, Conn. 

Reply Form 

Name 



Application No. 



191.. 



Period of employment 

Date of termination 

Cause of termination [[[ 

Salary $ per 

In what capacity was he 

Was he competent ? 

Was he reliable? , /........,.., 

Was he honest? 

Was he in the habit of using intoxicating liquors to excess^ 

Would you consider h.... worthy of confidence and so' recommend 

n for a similar position 

Remarks 



Name of employer. 



By. 



Form 63. (h) Reference Inquiry Letter (fourth page of fold- 
inside pages blank) 



4IO UNIFIED ACCOUNTING FOR INDUSTRIALS 



ROGERS MO lOR WORKS 

BRIDGEPORT, CONN. 

WTE REQUISITION FOR HELP 


BUILDING NO FLOOQ NO DEPt NQ TIME STATION NQ 


NUWeCR 
WAN 1 to 


KIND OF MEN WANTED 


DATE 
WANTED 


APPROXIMATE RATE 1 






































SijC of Form - 4 "G inches 
FVinted on Manilla Card 




















































STATE ABOVE, NATURE 
OF WORKMEN WAN I ED 


As--^ fn«?rMAN 


mPFMAN 


MAKE OUT SEPARATE 
REQUlSmON FDR EACH 
KIND OF MEN WANTED 




APUWOVFD SllPT 
APPPOVFD M/ODK*; MPiV 



FORMS RELATING TO LABOR 



NAME 



ADDRESS 



FOR DEPT. NO. 



TIME CLOCK NO. 



TRADE 



NATIONALITY 



CHANGE 

OF 
WAGES 



DATE 



RATE 



CHANGE 

OF 
DEPT 



DATE 



DEPT. NO. 



CLOCK NC 



O.K. 



DATE QUIT 



411 



ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 

EMPLOYEE'S RATE' CARD^ 



DATE EMPLOYED 



A.M. 



RM. 



BUILDING Na 



FLOOR Na 



TIME STATION NQ 



RATE PER WEI 



HOLBJ 



NATURALIZED MARRIED CHILDREN 



5i3c of rbrm - 4 
•intcd on Mani: 



frir 



«6 Inches. \ 
llacand. I 



DIVISION HEAD 



5UPT 



CAUSE 



ALL CHANGES IN RATES MUST TAKET PLACE AT COMMENCEMENT OF A FttY PEWOO. 



NAMES OF MEN SENT FDR 


DATE 


REMARKS 












































.. j feverse side of Form alxvcl 













































Form 64. Requisition for Help 



ABSENT RECORD 




HOURS 




HOURS 




HCXJCS 




HCXJB3 




HOJCS 1 


DATE 


AM 


P.M 


DATE 


AM 


RM. 


DATE 


AM 


PM 


DATE 


AM 


RM. 


DATE 


AM 


RM 


































































































































1 ' " 1 J- u _^ 

. 02%crse side of farm shown abo\e. L 


























^^— 






































_^ 


























1 : 


h 






























































































































































j 



























— _ 




f 














1 










ABSENCE MUST BE SHOWN FROM EVEEY HALT HOUR (JR 



Form 65. Employee's Rate Card, including Absent Record 



i^ 



412 UNIFIED ACCOUNTING FOR INDUSTRIALS 



ROGERS MOTOR WORKS 

BRIDGEPORT, CONM 

INTRODUCTION CARD 



BUILWNG NO. 



FLOOR NO, 



DePT»>0. 



TtMC STATION NO 



To. 



. in Dept. Na 



The bearer. 



is sent Id you in response to yjur order. 

for 



.^. 



YraQCS- 



.per Hour 



5ije of TbrTn-4»c. inches 
frirr+ed on Manilla card 



tjTjplcymerTi' Dept: 



7b be filled out and returned immediaie/v to Gvphywenf Ikpk 
Started wcrk af o'clock. Morrf-h toy 



No^. 



-Suptv 



By. 



Assf. Tbreman. 



Form 66. Introduction Card 



ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 

CHANGE IN rate: 



namc 



CLOCK NO. 



OCCUPATION 



DEPT. NO. 



COMMENC1NQ 



CATC 



FORMER CHANGE (to BCnwaneD w Accounrwe t»T) 



FROM 



FROM 



TO 



TO 



REASON 



StTC of fbrm - 4 » & inches 
■'Printed 00 Manilla cand 



.fOREMAN 



CHANGES or RATE WILL TAKE . 

PLACE ONLY AT THE BEGINNING 

OPA WVY PERIOD. APPO^/ED. 



.DTVISJON HtAO 



.SUPt 



APPROVEU. 



.WORKS MANAGER 



Form 67. Change in Rate Card 



FORMS RELATING TO LABOR 



413 



ROGERS MOTOR WORKS 

.BRIDGEPORT. CONN. 

CHANGE OF DEPARTMENT 

NAME • CLOCK NO. 


OCCUPATION DEPT. 




COMMENCING 


FROM DEPT 


TD DEPT 


DATE 












FORMER WORK 


CHANGE or EMPLOYEE'S NO. 




FROM NO 


TO NO. 


NEW WORK 












REASON 


1 




5i:e of Form - 4>'6 inches 
"Printed on Manilla cand 




FnOFMANI 
ANY CHANGE or RATF WILL NCfT A«^CT RnDFMAM 


TAKE PLACt UNTIL COMMENCE- 

MENT OF A F^Y PERIOD. f aPPROVEH^ ^ ror 

(APWOVED^ NAWDKS MANAGER 



Form 68. Change of Department Card 



DATF 






ROGERS MOTOR WORKS 

BRIDGEPORT, CONN. 

REPORT Of ABSl 
TiMF i^ATinN Nin nt 


iNTEE 

iPT. NO. . 


:s 








CLOCK NO. 


ABSENT 


CLOCK NO. 


ABSENT 


CLOCK NO. 


ABSENT 1 


A.M. 


RM. 


AM. 


RM. 


A.M. 


RM. 


































































■ 
































































SijeofPorm- 4«6 inches. 
Printed on white paper. 






















































































NUMBER PRESENT 




SinNFD 


NUMBER ABSENT 




TIMEKEEPER. 




















Form 69. Report of Absentees 



Ai^ UNIFIED ACCOUNTING FOR INDUSTRIALS 



ROGERS MOTOR W0RK5 

BRIOQtPOCT, CONN. 

QUITTING CARD 



NAME 



_ DATe 



ADOCJESS 



. OCCUPATION . 



CATC. 



. LENGTH OF SERVICE 



EMPLCrrEE*5 REASON 



FELLOW EMPLOYEE'S REASON 



INSPECTORS OPINION . 



R>CEMAN"5 RECOMMENDATION. 



Sije of fbrm - 4 » 6 Inches. 
Printed on Manilla card 



ACTION TAKEN 



IN EFFECT 



A.M.. 



.P.M. 



SGNED. 



.INDUSTRIAL SECY. 



ALWAYS ENCLOSE THESE CARDS IN A SEALED ENVELOPE 
TO BE FILED WITH ODlGlNAL APPUCATION CARD 



RECORD OP employee: 

FOREMEN WILL FILL OUT THIS CARD. 



WOBK 



FAST 



AVERAGE 



SLOW 



ABILITY 



tXCEUCMT 



GOOD 



FAIR 



POOR 



CONDUCT 



GOOD 



FAIR 



POOR 



INDICATE ABOVE BY PUTTlNCi X JN SQUARES 

WAS HE ABSENT FROM WORK FREQUENTLY ? 

HONEST ? . — — LCJYAL ^ 



IS THERE ANY REASON WHY HE SHOULD NOT BE RE-EMPLDYEDJ_ 



Reverse side of fbrm shown abcwcj 



TO CASHIER ' 



F»Y THE ABOVE-NAMED PERSON FOR 

-PER HOUR. ] NO P'ECES © PCQ 



HBS 



.MIN. 



, AMOUNT. 



aK_ 



FOREMAN 



HEAD OF DIVISION 



Form 70. Quitting Card, including Record of Employee 



FORMS RELATING TO LABOR 



41S 



ROGERS MOTOR W0CK5 

BRIDGEPORT, CONN. 

MONTHLY RECORD OF EMPLOYEES DISMISSED Oi^ RESIGNED 
^^•^- Year 19 



MONTH 



REASONS 



JAN 



Nay. 



Unsatisfectefy work 



Emplqyee dissatisfied 



Undesirable employee 



Another position 



111 health 



Sickness in family 



FtB. 



NQ 



g 



MAR 



Account- injury 



Death 



References unsatisfedory 



Attend schcxsl 



Matrimony 



Remain at home 



Ijeavinq city 



Non-attendance 



Tardiness 



NO 



Never ngported 



No reason 



Ownaccom 



rirm moving 



Lack of work 



Refuse to acknowledge errpr 



Jio advance in pay 



Reduction m pay 



Stealing 



No advance 



Dishonesty 



Special 



APR 



NO. 



MAY 



NQ 



JUNE 



NO 



^LY 



NQ 



^ 



AUG 



NQ 



SCPT 



NQ 



OCT. 



NO. 



530 of Form - 8i X n inches 
Printed on white paper 



■fotal 



Dept.% 



NCV. 



NO. 



DEC 



NO.% 



TOTAL 



NO 



% 



COMPARISONS AND PERCENTAaES 



Total negjgned 



"fatal dismissed 
Total out 



Average No-emploved dail y 



%l?esiqned-bava.ED. 



% Dismissed to p t/q. ED. 
'X>Total out to sNOi. LpL 



No. employees hired daily 



% Hired tp daily avq. E.D 



No. advanced in pay 



No. pnamoted 



No. transfemsd 



immi 



form 71. Monthly Record of Employees Dismissed or Resigned 



I 



4i6 UNIFIED ACCOUNTING FOR INDUSTRIALS 



PAY. CHECK 
Received ftil I payment of all demands to and including 
(DATE)_-_ 19— 



REGULAR AND EXTRA TlMt 



tegular Time . 

Extra "Hmc 

Piece- voH< 

Total 



JLc3sAdv.acxrtln& . 

Less other Advances 
NET PAY 



AMOUNT 



Sign name hens 



Address here 



HOTE- Hb money frill be delivered until this stub ispreaenlxd, 
■ properb/ si^ed. if lost, rqxrtatonceiDRjylkpsrtTnent. 

No. ^—m—. / f^rfbrahon 



Na 



TIME CARD 



DtPT.. 



NAME. 



pfti PCRiOO CNDtNq 



.19 



Na 



Expense Charge 



DAY 



AJvl. 



IN 



Regular Time 
Extra Time _ 
Piece-work _ 
Total 



Less Advances Acc't Ins.. 
Less other Advances 



NET PAY 



NOON 



oirr 



IN 



RM. 



OUT 



AMOUNT 



EXTRA TIME 



IN 



OUT 



Sje of rorm- 4 « 9i inches 
Printed on Manilla card. 



HOURS 



O.K. 



JTlMEKCtPCR 



APPROVED ©«'. 



PAYMASTER. 



Form 72. Pay Check and Time or Clock Card 



FORMS RELATING TO LABOR 



417 







J2 






^ 






4i8 UNIFIED ACCOUNTING FOR INDUSTRIALS 




FORAIS RELATING TO LABOR 



419 



PAY CHECK 

Received full payment of all demands to and including the da+c bdow. 
5JGNC0 



n 



ADDRESS. 



NOTE= No'^^^nitl''^i^?^^-^I^^*='^^^^^<^"«^85k«J for. 



NO. 



_ date: 



CARD NO. 



NO. 



NAME 



CARD NO. 
-DATE 



CLOCK CARD 



5TA. NO. 
CHARGE 



DtPT 



OK. 



TiMtKEEPEC 



APPROVED. 



CASHIER 



DEQULAR TIME 



EXTRA TIME. 



Piece-work 



TOTAL 



AMOUNT 



LESS ADVANCES 



IN 



MON. 



TUE. 



OUT 
IN 



OUT 



NET PAY 



WED 



< 



THUR. 



fRi. 



SAT. 



SUN 



TOTAL 



CK 






Form 75. Pay Check and Time Card (Second Method) 



FORMS 

ORGANIZATION CHART; DISTRIBUTION 
AND ANALYSIS SHEETS 

(Forms referred to in Chapter XII) 



i 

W. 1 '< 



422 UNIFIED ACCOUNTING FOR INDUSTRIALS 












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5ii 






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lis 



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n 






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ss 



III 





1^5 

IIS 

m 

^41 F 



-s: 

s 

o 

• ♦* 

s 
O 






DISTRIBUTION AND ANALYSIS SHEETS 



423 




424 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



DISTRIBUTION AND ANALYSIS SHEETS 



425 



B 


1 


— 1 '' 1 

DEPARTMENT 


LABOC-1 


= 


EXPENSE Dtp 

CLASsincAnoN nc 


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2 


PROOUCnVE 9 
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91 Tirame 


















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92 CnemehnQ 


















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93 Automatic 


















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94 k/lachine 




















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1 

FAaORY 




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MBCEL 
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DISTRIBUTION AND ANALYSIS SHEETS 



427 





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FORMS 

COMMERCIAL ACCOUNTING 

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432 UNIFIED ACCOUNTING FOR INDUSTRIALS 



FORMS— COMMERCIAL ACCOUNTING 



433 



PURCHASE VOUCHER 



NOL 



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AcNoi AccountTitles Amounts 



I certHy that the above occounf is comcct, end that the amount is wuched 

far by invoices regularly appn^ed ty the outtiorijed persons 

nPPBwEO 



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Check No, 



ACOOIKTAWT 



CONTTiOU-Cg 



B0GEP5 MOTOR W0RK5 

BRIDGEPORT. CONN. 



Remittance Slip of 
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Na 



NAME 



ADDRESS 



O&TES 



AMC3UNTS 



DEDUCTIONS 



WTCS 



AMOUNTS 



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DUR.ICATE of fbnn shofwn abac 
FVinted on yelkxv paper 



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ttie endorsement of chock is required. ^^ 

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Form 82. Voucher Tickler 



Form 81. Purchase Voucher 



434 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



FORMS-COMMERCIAL ACCOUNTING 



435 



I 



CHARGE VOUCHER 



NO. 



Name 
Address 



CATC 



EXPtANA"nON 



AMOUKT 



AccoufrtNa 
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OEDUCTtO raOM WRCHASt 
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DATE or AOJUSTMtNT 



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COMPTBOLLtR 



CHARGE VOUCHER 



NQ 



Name 
Address 



DATE. 



EXPLANATION 



AMOUMT 



Oup^lcs^c of rbrm shown ab 
Printed in rrd on yellow paper 



Dear 5ir.- 

Vfe beg Id advise ttiat we have changed jour account as above 
and have deducted same m settlement (f 
Very truly yours. 
ROGERS MOTOR WORKSi 

CRiOQCPORT, CXJNH 



Form 83, Charge Voucher 




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441 



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DATE 



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Na 



AUTHOfilTY 



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DCDJT 
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LEDGER 



DEBIT 



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Form go. Journal Voucher 



442 UNIFIED ACCOUNTING FOR INDUSTRIALS 





Co 

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FORMS 

CHART OF CONTROLLING ACCOUNTS 
(Form referred to in Chapters XIV and XV) 



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UNIFIED ACCOUNTING FOR INDUSTRIALS 




Adn^I — 5WLS1HLaCUN0UM«tQM317UWCX> 
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EQUIPMENT RECORD 



Description of Item. 



Made&y 



Inventory Tag No — 

Marif V-i Serial No _ 

^.^_ Fbrchase Orrkr fio. 

. Date of Invoice Date Rec'd. - 



floor Space- 
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. VfeigW lbs Speed Chart No.. 



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Printed on White Card. 



REMARKS: 



PURCHASE COST 




REPAIR COST 








- 


DATE 


AMOUNT 


DATE 


AMOUNT 


Invoice rncc - 
















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1,1 


ADDITIONAL VALUES 















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MANUFACTURING COST 


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'""""B*""* — ■ ■" 

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Form 94- Equipment Record 



Form 95 
STORES LEDGER 

With ready reference stores classifi- 
cation, indexed, tabulated, and contain- 
ing a short description of the various 
classes. 

Note : Nothing is more necessary in the revamping or systematizing 
of a business than a complete classification of general stores; to open 
up a "Stores Ledger" only partially classified means a continual an- 
noyance, delay, and rearranging of ledger sheets to introduce new 
classifications from time to time. The usual stores classification, as 
given in Chapter IV, is simply indicative, leaving it for the stores 
recorder or stores keeper to work out the full classification to suit 
himself. 

The stores ledger presented herewith gives a complete classifica- 
tion of stores for factories, alphabetically arranged and captioned. 
Each class is numbered with a Dewey decimal number and is ready 
for accounting and statistical work, and from this classification the 
manufacturer can select such names as fit his particular business and 
thus have his ledgers properly opened at the very start. 



I 



\ 



450 UNIFIED ACCOUNTIxNG FOR INDUSTRIALS 

Tabulation Showing Stores Classification and 

Class Number 

(Key number not shown here, is placed before the dash.) 



■1.0 Abrasives 

-1.1 Books 

-1.2 Chemicals — Drugs 

-1.3 Compounds 

-1.4 Cordage 

-1.5 Equipment 

-1.6 Fabric 

-1.7 Fibre 

4.8 Fittings 

-1.9 Fuel 



-2.0 Leather 

-2.1 Lubricants 

-2.2 Lumber 

-2.3 Machinery 

-2.4 Metals 

-2.5 Paint 

-2.6 Paper 

-2.7 Stationery 

-2.8 Tools — Hand, Small 

-2.9 



STORES CLASSIFICATION 

-1.0 
Abrasives 

In this classification arc to be included all cutting or 
grinding supplies and wheels used for this purpose. 



Carborundum 

paper 

powder 

stone 

wheels 
Crocus cloth 
Emery 



cloth 

paper 

powder 

wheels 
Garnet, paper 
Glass, ground 
Paper, sand 



Pumice 

powder 

stone 
Sand, sandblast 
Soap, grit 
Stone, sand 
Wheels, grinding 



STORES LEDGER 



-1.1 



45 1 



Books 

In this classification are included all books of any kind, 
whether catalogues, periodicals, accounting or other books. 



Accounting books 
Atlases 
Blank books 
Copy books 



Directories 
Guide books 
Memorandum books 
Order books 



Scrap books 
Stenographers' books 



-1.2 
Chemicals — Drugs 

In this classification are included all chemicals for labo- 
ratory and shop use, and also all drugs, instruments, etc., for 
the hospital. 



Arnica, tincture 
Aspirin 
Bags, ice 
Bandages 

gauze 

muslin 

roller 

rubber 
Basins, dressing 
Belladonna 
Benzene, purified 
Benzoin, tincture 
Bismuth 
Bottles 

acid 

magnesia 
Brimstone 
Calcium chloride 
Calomel 
Catgut ligature 
Caustic 



Chemicals— fire extin- 
guisher 
Chloral hydrate 
Chloroform 
Cocaine 

Condensers, laboratory 
Cotton 

Cotton, absorbent 
Creosote 
Digitalis 
Droppers 
Ether 

Ethyl morphine 
Exterminator 
Funnels, glass 
Gauze, 

absorbent 

antiseptic 

Iodoform 
Gloves, rubber 
Graduates 



Instruments 

Iodide 

Lime 

Linaments 

Needles, hyperdermic 

Nitrate 

Oils 

ammonia 

castor 

linseed 
Ointments 
Plaster, adhesive 
Plungers, syringe 
Potash 
Saltpeter 
Salts, soldering 
Sheeting, rubber 
Soda 
Spatulas 



\i 





45 



. UNIFIED ACCOUNTING FOR INDUSTRIALS 



-1.3 



Compounds 

In this classification are included all boiler, cement, wash- 
ing and other compounds (also the composition used for 
printing rollers), whether used in the shops or by the office. 



Cement 

belt 

furnace 

high temperature 

liquid 

pipe covering 

Portland 

roofing 

rubber 

steam pipe 

water pipe 
Cleaner 

boiler 



floor 

hand 

squeegee 

tube 
Composition, roller 
Compounds 

acid proof 

alkali proof 

flexible 

molasses 

polishing 

scouring 

welding 



Gelatin, photo 
Glue 

Hectograph 
Polish 

furniture 

metal 

stone, rotten 

Soap 

compound 

scouring 

soft 



-1.4 
Cordage 

In this classification are included all 



cordage. 


oakum, jute, waste, etc., etc 


Caulking 


tarred 


jute 


window 


oakum 


Lacing 


Cord 


cord 


bell 


twine 


cotton 


Oakum 


flax 


caulking 


flexible 


navy 


halyard 


picked 


hemp 


Rope 


jute 


cotton 


lacing 


flax 


marlin 


hemp 


picture 


manila 


•^ash 


Twine 



twines, cords and 

broom 

cotton 

flax 

gray 

hemp 

jute 

lacing 

linen 

sail 

seine 

tag strings 

unoiled 
Waste 

cotton 

wool 






STORES LEDGER 453 

-1.5 
Equipment — Factory, Office 

In this classification are included all supplies and materials 
such as furniture and articles of daily use which are not tools 
or fittings. 



Baseboards, typewriter 


Cots 


change making 


Baskets 


Cups 


comptometer 


desk 


Cushions 


computing 


office 


chair 


computing and 


rattan 


rubber 


typewriter 


waste 


typewriter 


duplicating 


Bedsteads 


Cuspidors 


envelope opening 


Bookcases 


Desks 


envelope closing 


revolving 


flat top 


eyelet 


sectional 


flat (extra large) 


mimeograph 


Bottles, water 


roll-top 


neostyle 


Boxes 


table 


numbering 


storage 


typewriter 


paper fastening 


transfer 


Dippers 


pencil sharpening 


Brushes, hair 


Dusters 


perforating 


Cabinets 


feather 


roller copying 


book 


wall 


stamping (postage) 


file 


Files, document 


typewriters 


sample 


Filters, water 


watches, stop 


stationery 


Glasses 


Matches 


steel 


drinking 


Microscope 


Cameras 


magnifying 


Racks 


Carts, push 


microscopic 


hat 


Chairs 


Hangers 


towel 


bent wood 


Holders, telephone 


umbrella 


revolving, cushion 


Ice 


Rests, arm 


saddle seat 


Ladders 


Rollers 


step-ladder 


Machines 


chart 


typewriter 


adding 


map 


Clocks (not time) 


addressograph 


window-shade 


Containers 


billing 


Sweepers, carpet 



\l 



454 



UNIFIED ACCOUNTING FOR INDUSTRIALS 



-1.6 



Fabric 

In this classification are included all woven and other 
fabrics such as bagging, netting, canvas, rubber, leatherette, 
etc., etc. 




Aprons 


round 


fabric 


laboratory 


Blankets 


rubber 


rubber 


Bunting 


Mats 


shop 


Burlap 


cocoa 


storm (auto) 


Carpet 


rubber 


Bagging 


Cloth 


Matting 


Bagging, jute 


awning 


cocoa 


Bags 


copying 


rubber 


burlap 


scrub 


Roofing 


canvas 


wiping 


paper 


coffee 


Counterpanes 


rubberoid 


coin 


Covers 


Rubber 


duck 


desk 


Sacks 


Baskets, leatheroid 


typewriter 


Shades, window 


Bedspreads 


Felt 


Strips, weather 


Belting 


Flags 


Towels, cloth 


cotton 


Hose 





-1.7 

Fibre 

In this classification are included everything in the nature 
of fire-resisting materials and supplies, such as asbestos, steam 
packing, boiler packing, etc. 



Asbestos 


paper 


wick-packing 


fireboard 


pipe-covering 


wood 


insulating 


sheet-packing 


wool 


millboard 


tape 





STORES LEDGER 



-L8 



455 



Fittings 

In this classification are included all fittings, such as auto- 
mobile, plumbing, steam, electrical; unions, couplings, nails, 
brads, pots, etc.; that is to say, anything and everything used 
in the plant which does not properly come under tools or 
equipment. 



Annunciators 


bronze 


Clamps 


Arrestors, lightning 


composition 


basin 


Basins, wash 


porcelain 


beaker 


Baskets, toting 


steel 


beam 


Bells 


Buttons 


bolt 


Blades, fan 


door 


cabinet 


Bolts 


push 


condenser 


expansion 


Cable 


iron 


machine 


electric 


laboratory 


track 


elevator 


pinchcock 


Bone, black 


iron 


steel 


Bowls 


steel 


wood 


closet 


Cans 


Clay, fire 


urinal 


ash 


Clips, shade roller 


Boxes 


garbage 


Clusters, electric 


conduit 


G I 


Coils 


tote 


oil 


fan 


Braces 


paint 


resistance 


Brackets 


sprinkling 


Condensers 


Brick, fire 


steel 


glass 


Buckets 


tin 


metal 


fire 


Carbon 


Conduit 


galvanized 


electric 


flexible 


paint 


filament 


rigid 


Bulbs 


Card holders 


underground 


atomizer 


brass 


Connectors, hood 


electric 


iron 


Coolers, water 


horn 


Catches 


Copper 


Burners 


Centers, push button 


bronze 


gas 


Chains 


cups 


incandescent 


jack 


funnels 


Burnishers, metal 


sash 


gauze 


Bushings 


transom 


gutter 


Babbitt 


weight 


rivets 


brass 


Checks, door 


rods 



4S6 



UNIFIED ACCOUNTING FOR INDUSTRIALS 




Copper — continued 


towel 


rake 


solder 


'• paper 


scoop 


tacks 


Flanges 


shovel 


terminal 


Funnels 


sledge 


valve 


enamel 


socket 


washers 


filtering 


spade 


wire 


glass 


tub 


Couplings 


porcelain 


Hangers 


elbow 


tin 


door 


hose 


rubber 


pipe 


round 


valve 


Hinges 


Crucibles 


Gaskets 


brass 


Cups, oil 


glass 


iron 


Cut-outs 


rubber 


Hods 


Discs, valve 


Glass 


Holders 


Drawers, door 


condensers 


crucible 


Elbows 


gages 


door 


Electrodes, arc 


globes 


shade 


Excelsior 


plate 


toilet paper 


Extinguishers 


reflector 


twine 


Eyelets 


shades 


Hooks 


Eyes 


tubing 


awning 


screw 


window 


bale 


steel 


wired 


belt 


Fans 


Gutter 


ceiling 


ceiling 


copper 


picture 


oscillating 


galvanized 


pipe 


wall 


iron 


screw 


Fasteners 


wrought 


spout 


belt 


Handles 


Hose 


casement 


adze 


air 


clamp 


awl 


rubber 


clip 


axe 


steam 


sash 


broom 


Insulators 


woodwork 


chest 


Iron 


Figures — Letters 


chisel 


filings 


Fittings 


drawer 


palings 


conduit 


file 


retort stand 


electric conduit 


fork 


steps 


flexible 


hammer 


Irons, corner 


hose 


hatchet 


Isinglass 


metal 


hoe 


Jambs, door 


pipe 


mop 


Jars 


Fixtures 


pick 


acid 



STORES LEDGER 



457 



Juts— continued 


drop 


Rings 


battery 


plumbing 


insulating 


flint 


Nuts 


key 


glass covered 


blank 


screw 


glass stoppered 


bolt 


Rivets 


Joints, insulating 


cold 


Rods 


Knobs 


hexagon 


brass 


mortice 


machine screw 


copper 


rim 


square 


iron 


shutter 


tapped 


steel 


split-insulator 


thumb 


Rollers 


Lamps 


Pins 


iron 


arc 


cotter 


steel 


electric 


steel 


Roofing 


hand 


taper 


pro- slate 


headlight 


Pipe 


tin-plate 


oil 


iron 


Rosettes 


repair 


lead 


Scales 


spirit 


terra-cotta 


counter 


tail-light 


tin 


double beam 


Lanterns 


vitrified 


platform 


conductor's 


Plugs 


track 


dark 


basin 


warehouse 


hand 


fuse 


Scoops 


switch 


Plumb-bobs 


Screens 


Lifts 


iron 


Screws 


sash 


brass 


closet 


transom 


Poles 


jack 


Locks 


steel 


Seals, car, lead 


cupboard 


window 


Seats, closet 


desk 


wood 


Shades, electric light 


door 


Pots, glue 


Shields 


drawer 


Racks 


aluminum 


night 


test tube 


expansion 


pad 


towel 


eye 


Loops, chandelier 


Radiators 


finger 


Marble 


auto 


Shut-offs 


Nails 


heating 


Snaps, chain 


Needles 


Railings, iron 


Sockets, electric 


packing 


Rails 


Spikes, railroad 


sack 


iron fence 


Spoons, weighing 


sail 


steel railroad 


Spouting, pipe 


Netting, wire 


Renewals, battery 


Sprays 


Nipples 


Rests, shelf 


disinfectant 



\\ 



ni 



■ 



458 UNIFIED 


ACCOUxNTlNG FOR 


INDUSTRIALS 


Sprays — continued 


floor 


Tweezers 


hose 


wall 


Type, printing 


Springs 


Switches 


Unions 


door 


battery 


Valves 


check 


entrance 


air 


fan 


knife 


flushing 


Sprinklers 


panel 


pump 


fire 


pendent 


radiator 


lawn 


railroad 


steam 


Squeegees 


snap 


water 


floor 


Swivels 


Washers 


window 


Tacks 


brass 


Stakes 


carpet 


copper 


Staples, insulated 


upholstery 


iron 


Stays, chain 


wiring 


lead 


Stencils 


Tanks, water 


steel 


Stone 


Terminals, cable 


Wax 


ballast 


Terra-cotta 


Weights 


broken 


Tiles, porcelain 


sash 


grind 


Toggles 


scale 


sharpening 


Tops, auto 


Wheels, pipe cutter 


soap 


Torches 


Wire 


Stops, door 


electric 


annunciator 


Strainers, paint 


gasoline 


black 


Studs 


hand 


copper 


belt 


Trays, tote 


iron 


fixture 


Tubing 


steel 


insulating 


Tubs 


telephone 


Sweeps 


Turnbuckles 


Wringers, mop 



-1.9 
Fuel 

In this classification are included any and every material, 
substance or liquid used to feed a flame for the purpose of 
producing steam, heat, or light. 



Benzine 


anthracite 


Naphtha 


Candles 


bituminous 


Oils 


Charcoal 


Coke 


Paraffine 


Coal 


Gasoline 


Wood 



STORES LEDGER 



459 



-2.0 
Leather 

In this classification are included leather belting, lacing, 
hides, chamois, fur robes, or fur-lined coats, such as those 
worn by chauffeurs. 



Bags 

document 

hand 

money 

Belting 



Chamois 

Coats, fur, chauffeurs' 

Gaskets 

Hides 

Laces 



Lacing 

Rawhide 

Robes, fur, automobile 

Straps, gun 

Washers 



-2.1 
Lubricants 



In this classification are included all oils, rrreases or sub- 
stances of any kind used for lubricating machinery. 
Graphite graphite Havoline 
Grease Oil machine 
auto auto Tallow 
axle cylinder Vaseline 
cup engine 



i 



-2.2 
Lumber 



In this classification are included all wood of any descrip- 
tion, whether in the rough or dressed state, and also boxes used 
for packing. 



Arms, cross 


Gum 


Poplar 


Ash 


Hemlock 


Posts 


Backing 


Hickory 


Scantling 


Basswood 


Maple 


Shelving 


Boxes, packing 


Millwork 


Siding 


Capping 


Moulding 


Slats 


Cedar 


Oak 


Spruce 


Chestnut 


Paling 


Stepping 


Cypress 


Pine 


Strips, weather 


Flooring 


Poles 


Walnut 




f^ t 



460 



UNIFIED ACCOUNTING FOR IXDUSTRIALS 



-2.3 



Machinery 

In this classification are included all machines and ma- 
chinery erected in the shops (including time clocks) such as 
burring, broaching, chambering and miUing machines. 



Arrester, dust 


horizontal 


double stroke 


Assembling, grip 


sensitive 


upsetting 


Automobiles 


upright 


Joining 


delivery, light 


vertical 


Jointing, saber handle 


touring 


Driving, bolt nut 


Key seater 


truck, electric 


Engraving 


Lathes 


Backing-oflF 


Exhaust fan 


barrel turning 


Balancing-knife 


Exhauster 


bench 


Barrel bedding 


Fans 


cone head 


Beading 


double 


engine 


Belt 


single 


double 


benches 


Filing 


geared 


scarfing 


Folding 


quick-change 


lacing 


Forming 


single 


Benches, saw 


Gaging 


speed 


Boring 


Grinders 


tool makers 


saber handle 


automatic 


turret 


spindle 


barrel drill 


variety 


vertical 


form cutter 


wood 


Brakefolder 


hemming 


Marking 


Broaching 


open side 


Mill 


Burring 


plain 


boring 


Calibrating 


precision 


charcoal 


Centering, gun stock 


rivet 


turning 


Chambering, barrel 


special 


vertical 


Coilers 


tool 


Millers 


Compressors 


vertical 


adjustable 


Cutters, bolt 


wet tool 


automatic 


Cutting-ofT 


Grooving, graining 


bench 


Dental engines 


Hammers 


cam 


Dies sinkers 


drop 


external thread 


Drilling, hand guard 


cushion 


hand 


Drills 


steam 


internal thread 


automatic 


strap 


plain 


barrel 


Heading 


semi-automatic 


high speed 


single stroke 


universal 



STORES LEDGER 



461 



Millers — continued 


machines 


Shears 


vertical 


traps 


alligator 


Nut Screwing 


Sawing 


angle 


Planers, 4 roll 


band 


bar 


Planing, jointing 


rip 


bench 


Polishers, automatic 


scroll 


combination 


Polishing 


wood 


lever 


frames 


Saws 


power 


heads 


equalizing 


special 


Presses 


facing 


squaring 


arbor 


hack 


Slotting 


bench 


high speed 


automatic 


embossing 


hot 


die 


hydraulic 


wood-trimming 


hand 


knuckle 


Screw machines 


Splinters, receiver 


hot trimming 


automatic 


Spotting 


pillar 


automatic cut-off 


Spring 


plain 


automatic turret 


setting 


power 


hand 


winding 


punch 


plain 


Stake holders 


reducing 


slotters 


Stamping 


special 


wire feed 


Straighteners 


Profilers 


Separators 


Striking 


automatic 


oil 


Swagging, hot 


horizontal 


sterling 


Tapping 


spindle 


turbine 


multiple spindle 


wood 


waste 


vertical 


Punching 


Shapers 


Tenoner, standard 


Reamers 


crank 


Testing, vertical 


Rifling 


horizontal 


Thread, rolling 


Riveting 


universal 


Tilting 


rotary 


vertical 


Turning, wood 


spindle 


wood 


Welding 


vertical 


Shaping 


acetylene 


vibrating 


butt 


automatic 


Rolling 


crank 


electric 


Sand-blast 


vertical 


spor 


barrels 


Shavers, bench 


Wheel washing 


cabinets 


Shaving 


Wiring, turning 



[ 



I ii 



] 



462 UNIFIED ACCOUNTING FOR INDUSTRIALS 



-2.4 



Metals 

In this classification are included all bar, cast, sheet and 
pig metals of any kind whatsoever which are not actually made 
up into definitely named articles. 



Aluminum 


pig 


Steel 


bar 


sheet 


component 


sheet 


Lead 


high speed 


Babbitt, bar 


bar 


high speed tool 


Brass 


cake 


machine steel 


bar 


pig 


Tin 


sheet 


sheet 


block 


Bronze 


Magnolia 


pig 


bar 


Manganese 


sheet 


block 


Sheathing 


Zinc 


Iron 


Sheeting 


bar 


bar 


Solder 


sheet 


cast 


Spelter 





-2.5 



Paint 



In this classification are included all paints, varnishes, 
shellac, rosin, tar and other supplies of like nature. 



Drier 


Lampblack 


Preservative 


japan 


Lead 


Putty 


paint 


sugar 


Resin 


Dry 


white 


Rosin 


Enamel 


red 


Shellac 


Filler 


Lime 


Stain 


Finish, wall 


Mixed 


Tar 


Gum, veneering 


Pitch 


Turpentine 


Japan 


Plaster of Paris 


Whitewash 1 



STORES LEDGER 



-2.6 



463 



Paper 

In this classification are included all bulk paper, cardboard, 
made up pasteboard boxes, etc., etc. 



Bags 


oil 


colored 


mailing 


press 


manila 


mails 


straw 


white 


Board 


tag 


Paper 


beaver 


Boxes 


wrapping 


binders 


cardboard 


writing (in bulk, 


bristol 


pasteboard 


uncut) 


illustrating 


Cardboard 





-2.7 

Stationery 

In this classification are included all cut paper, letter-heads, 
envelopes, forms (printed and blank), pens, pencils, etc. 



I 



Bands, rubber 


prepared 


steel 


Binding devices 


Charcoal, artists' 


Films, pack 


loose-leaf 


Clips 


Folders, paper 


passe-partout 


board 


Frames 


Brushes 


brass 


label 


artists* 


paper 


map 


copy 


spring 


printing 


draftsmen's 


steel 


Glasses, drinking 


mucilage 


photo 


Gum arable 


paste 


Compasses 


Ink 


Calendars 


beam 


colored 


desk 


pen 


copying 


wall 


pencil 


drawing 


Cards 


Cups, paint 


duplicating 


guide 


Cushions, pin 


fountain pen 


index 


Cutters, paper 


indelible 


manila 


Edges, straight 


marking 


pressboard 


Envelopes 


numbering machine 


Chalk 


Eradicator 


stamp pad 


crayons 


Erasers 


stencil 


French 


rubber 


Inkstands 






^1™f' 



464 UNIFIED ACCOUNTING FOR INDUSTRIALS 



' 




Instruments, drawing 
Knives 
office 

pencil sharpening 
Labels, gummed 
Magnets 
Mallets 
Mucilage 
Pads 
chair 
desk 

numbering machine 
stamp 
typewriter 
Paper 
backing 

billing machine 
binding 
black print 
blue print 
bond 
bromide 
carbon 

computing machine 
detail drawing 
detail manila 
developing 
drawing 
filter 
fly 

gummed 
impression 
India 
ledger 

machine finish 
manila 
map 



note 
off-set 
onion skin 
paraffine 
photostate 
photographic 
platinum 
process 
sketching 
stencil 
tissue 
typewriter 
Paste 
Pencils 
artists' 
automatic 
camel's hair 
carpenter 
colored 
lead 
slate 
Pens 
bow 
drafting 
fountain 
lettering 
ruling 
steel 

stylographic 
swivel curve 
Pins 
Plates 

photographic 
printing 
Pounces 
Racks 
pen 



stamp 
Ribbons 

adding machine 

computing machine 

dating stamp 

duplicating machine 

typewriter 
Rulers *' 

drawing 

parallel 

patent 

shde 
Scales 

automatic 

coin 

drafting 
letter 
Scissors 
Silk, oiled 
Sponges 
Tabs, index 
Tacks 
push 
thumb 
Tags 
key 

merchandise 

shipping 
Tank, developing 
Tape 

adhesive 

gummed 

linen 
Thermometers 
Trays, photo 
Triangles 
Wax, sealing 



-2.8 

Tools— Small and Hand 

In this classification are included all small and hand tools 
of any kind whatsoever. 



Adzes 
Anvils 
Augers 
Awls 

book-makers' 
ice 
Axes 
Bellows 
Bevels 
Bits 
auger 
expansion 
plane 

screw driver 
twist drill 
Blades 
awl 
saw 
Braces 
corner 
ratchet 
Brushes 
cleaning 
dusting 
kalsomine 
machinists* 
marking 
paint 
radiator 
sash tool 
scrub 
stencil 
stipplers 
toilet 
varnish 
whitewash 
Calipers 
Caulks 
Chisels 
cold 
hot 
Clamps 

Combs, graining 
Countersinks 



STORES LEDGER 

metal 
wood 
Couplings 
Cups 
force 
plumber 
Cutters 
glass 
pipe 
Dies 

pipe cutter 
stamp 
stencil 
stock 
Dividers 
bow 

hair-spring 
proportional 
Drills 

auto boring 
breast 
carbon steel 
hand 

high speed 
metal 
miller's 
machine 
Stanley's 
shank 
star 
taper 
twist 

wood, taper 
wood, square 
Files 
bastard 
flat 

one-half round 
rasp 
round 
triangular 
Gages 
Hammers 
blacksmith 



465 



bookbinder's 
bricklayer's 
claw 

engineer's 
machinist's 
planishing 
riveting 
sledge 
tack 
tinner's 
upholstery- 
Hones 
oil 

water 
Instruments, preci- 
sion gages, etc. 
Irons, soldering 
Jacks 

hydraulic 
lifting 
wheels 
Knives 
drawing 
hacking 
putty 

shoemaker's 
Levels 

carpenter's 

hand 
Mattocks 
Microscopes 
Mops 
Mortars 

glass 

porcelain 
Moulds 
Mowers, lawn 
Oilers 

brass 

copper 

iron 
Picks 

concrete 

railroad 



M 



\ 



466 UNIFIED ACCOUNTING FOR INDUSTRIALS 



Pincers 


tinner's 


blacksmith's 


Planes 


trimmer's 


chain 


Plungers, screwdriver 


Shovels 


ice 


Points, glazier's 


D handle 


Trowels 


Pumps 


L handle 


brick 


force 


post-hole 


cement 


section 


S handle 


circle 


suction 


scoop 


corner 


Reamers, hand 


snow 


garden 


Saws 


Spades 


plastering 


circular 


D handle 


pointing 


coping 


L handle 


Vises 


crosscut 


S handle 


chain 


hack 


Spatulas 


hand 


hand 


Squares 


machinist's 


rip 


carpenter's 


saw 


Scrapers 


machinist's 


Wrenches 


paint 


Swedges 


hand 


wood 


Tampers 


monkey 


Shears 


concrete 


stillson 


grass 


railroad 


tap 


hedge 


Tongs 





-2.9 

This number section provides for a possible future sub- 
division of one of the now existing classes should it be deemed 
necessary. 



INDEX 

(Form references are to pages.) 



Accounting, 
commercial, 241-264 
industrial, 
elements of production con- 
stant, 6 
standards developed, 6 
unified, 9, 10 
purposes of, 28 
Accounts, 
analytical, 

cost accounting requires, 7 
controlling, 265-315 
asset accounts, 270, 272-281 
chart of, 269, 270 

Forms, 444 
liability accounts, 270, 299- 

310 
moral effect of, 33, 34 
nomenclature of, 9, 10 
principles applied to pro- 
duction costs, 9, 10 
profit and loss accounts, 

270, 271, 310-315 
purpose of, 267-269 
stores, component, 98, 99 
unify cost and general ac- 
counting, 268 
payable, 
cash disbursed, entry, 253 
controlling account, 301 
datings, controlling ac- 
count, 302 
personal, 264 
voucher system, 243-249 

467 



receivable, 
cash receipts, entry, 251 
consigned, asset account, 

274, 275 
controlling account, 273, 274 
past due, controlling ac- 
count, 274 
suspense, controlling ac- 
count, 275, 276 
Advanced expense (Sec "Ex- 
pense, advanced") 
Advertising expense, 
advanced, 278 

distribution of selling expense, 
263 
Allowances (Sec "Rebates and 

allowances") 
Analysis sheet, sales, 239 

Forms, 430 
Assembling, 
production order, 62 
material distribution, 106 
Forms, 368 
requisitions, 103, 104 
Forms, 365 
Assets, 

accounts, controlling, 270, 272- 

298 
current, 270 
fixed, 
repairs chargeable to depre- 
ciation, 7 
inventory, 270 

classification of, 329 
investments, 270 



! 



II 



468 



INDEX 



B 



Balance sheet (monthly), 27-40 
Forms, 343-347 
executive's viewpoint, 33-36 

collections, 34 
financier's viewpoint, 30-32 
earning capacity, 31 
solvency of company, 31 
industrial manager's, 27-40 

Forms, 342-347 
manufacturer's viewpoint, 36 
time of completion, 30 
unified, 
availability and value, 38, 39 
Betterments, 181-183 
order record, 233 
orders, 182, 183 
Forms, 393 
defined, 168 

distribution of copies, 182 
numbering of, 182 
time ticket (daily), 183 

Forms, 401 
"work in progress," treatment 
of, 182. 183 
Blue prints (See "Drawings and 

tracings") 
Board, 
control or planning, 190 

Forms (insert), 404 
machine, 193, 194 
Bonds, 
controlling account, 308 
redemption fund, 

controlling account, 306 
treasury, 279 
Buildings, 
controlling account, 289 
depreciation on, 64, 290 

reserve for, 305 
equipment, 
controlling account, 289, 290 
depreciation on, 64, 290 
Burden (Sec "Overhead") 



Calculations, 
extensions, handling of, 107, 
108 
Capital stock, 307, 308 
common, 
controlling account, 308 
treasury, 280 
preferred, 
controlling account, 308 
treasury, 279, 280 
Card, time (See "Time card") 
Cash, 
bank controlling account, 272 
disbursements (check), entry, 

252-254 
incoming, sheet, 250 

Forms, 436 
petty, 254-256 
controlling account, 272, 273 
"imprest system," 254 
record, 254-256 
voucher, 254-256 
Cash sheet, incoming, 250-252 
Censorship of materials, 73. 74 
Charge voucher, 247 

Forms, 434 
Charts, 
controlling accounts, 269 

Forms, 444 
graphic, 161-164 

Forms (insert), 389 
component schedule, 162 

Forms. 390 
order control, 188-189 
Forms (insert), 404 
pay-roll, 160 
unit schedule, 162 
Forms (insert), 390 
organization, 223-224 

Forms, 422 
wages, 
day work rates and piece-work 
earnings, 202 



INDEX 



469 



Check, 

disbursements, record of, 252 
Forms, 437 
Claim voucher, 54 

Forms, 355 
Clerks, salaries of, 

overhead distribution, 227 
Clock card (See "Time card") 
Commercial accounting (See "Ac- 
counting") 
Commercial expense distribution 
sheet, 258-264 
Forms, 442 
Commission, expense (selling) 

distribution, 262 
Compensation of employees (See 

"Wages") 
Component stores (See "Stores, 

component") 
Control, 
created by unified methods of 
accounting, 28 
Control board, 175 

Forms (insert), 404 
routine of, 190 
Controlling accounts (See "Ac- 
counts, controlling") 
Costs (See also "Labor," "Over- 
head," "Production") 
flat (See "Costs, production") 
primes, 67 
production, 186, 187 
accounts, analytical, 7 
card, 236-238 

Forms, 428, 429 
commercial transactions not 

included, 7 
quantities made affecting, 14 
reduced by volume output, 14 
sales policy effect upon, 11 
Credits, 
expense, commercial, 263, 264 
stores, general, 89, 90 
Forms, 359 



Day-work, 
clock cards, 207, 217 

Forms, 416, 419 
daily production time tickets 

and slips, 173 

Forms, 396, 399 
time sheet record, 213, 215, 216 

Forms, 417, 418 
Debts, bad. 
reserve for, controlling account, 

306 
Defective repairs, 
rejection for, 188 

Forms, 404 
time ticket, daily, 177, 178 

Forms, 400 
Demonstrations, 262 
Depreciation, 
accounting, principle same in all 

industrials, 6 
buildings, 290 

costs charged monthly with. 32 
departmental overhead, 

basis of calculation, 230, 231 
drawings and tracings, 65 
equipment, building, 290 
equipment, by obsolescence, 6 
investments, reserves for, 286 
material, by obsolescence, 6 
monthly, overhead distribution, 

230, 231 
rates of, 64, 65 
recovery through repair orders, 

234 
reserves for, 

buildings, controlling account, 
305 

patents, controlling account, 
305 

plant repairs, 184 
Dewey decimal system, 
classification of betterment 

orders, 64, 65 




470 



INDEX 



I 



Dewey decimal system — continued 
classification of stores, 
Forms, 449 
Dies, 
depreciation on, 65 
standardization of, 116 
Dies, jigs, and fixtures, 

controlling account, 293, 294 
Disbursements, 
petty cash, 254-256 
Form, 439 
Discount, 
allowed, 
expense (commercial) distri- 
bution sheet, 261 
earned (cash), 
expense (commercial) credit, 
264 
purchase, 

cash disbursed, entry, 253 
sales, cash receipts entry, 250 

Distributions, 219-239 
commercial expense, 258 

Forms, 442 
factory overhead sheet, 224-233 

Forms, 423-426 
organization on required, 221 
production cost card, 236 

Forms, 428, 429 
record of production, betterment, 

and repair orders, 233-236 

Forms, 423 
sales analysis sheet, 239 

Forms, 430 

Dividends declared, 
controlling account, 309, 310 

Drawings and tracings, 
card index and record, 128, 129 

Forms, 375 
controlling account, 297 
cost record covering, 128 
depreciation on, 65 
numbering of, 121 



Earnings, 
financier's viewpoint of balance 

sheet, 31 
Efficiency, 
engineering (See "Engineering, 

industrial") 
factors, 

labor stability, 22 

nature of product, 22 
Electrical service, 
depreciation on, 64 
overhead distribution, 231 
Employees, 
absentees' report, 203 

Forms, 411, 413 
department, change of, 203 

Forms, 413 
dismissed, 204-206 
Forms, 414 

monthly record, Forms, 415 
pay-roll system, 206, 207 
quitting card, 204, 205 

Forms, 414 
rate card, 201 

Forms, 411 
rate, change in, 203 

Forms, 412 
record of, 205 

Forms, 414 
resignations, 204-206 

monthly record, Forms, 415 
time or clock card, 207, 217 

Forms, 416, 419 
time sheet, 209, 215 

Forms, 417, 418 
Employment, (See also "Labor") 
application for, 199, 200 

Forms, 406-408 
Engineering, industrial, 3-24 
conditions necessitating, 3-5 
phases of, 5, 6 
principles of, 6, 7 
purpose of, 5 



INDEX 



47 A 



Engineering, industrial— cow/mM^d 

qualifications required, 5, 6 
Entertainment, 
expense (selling) distribution, 
262 
Equipment, (See also "Machines") 
balance of, 16, 17 

idle machines, 15, 17 
depreciation, 5, 290 
machine tool, 

analyzing and grouping of, 
116, 133-148 
miscellaneous, 
controlling account, 295, 296 
overhead distribution, 229, 230 
obsolete, controlling account, 307 
record, 332 
Forms, 447 
Erasures, 

errors not to be changed by, 250 
Error in incoming cash sheet, cor- 
rection of, 250 
Executive, balance sheet as viewed 

by, 33-36 
Expense, (See also "Overhead") 
advanced, 
advertising, 278 
development and experimental 
work, controlling account, 
298 
insurance, 277 
salesmen, 278 
commercial or office, 
controlling account, 312 
credits, 263, 264 
distribution sheet, 258-261 
Forms, 442 
distribution of, 7, 8 
clement of production cost, 6 

legal, 

expense (commercial) distri- 
bution sheet, 260 
overhead distribution, 230-232 

Forms, 423-426 



patents, 
expense (commercial) distri- 
bution sheet, 260 
percentage based on net sales, 

258 
selling, 261-263 
Express (See "Freight and ex- 
press") 



Factory materials (See "Ma- 
terials") 
Factory overhead sheet for distri- 
butions. 
Forms, 423-426 
Failures, industrial, 

causes of, 7, 8 
Filing, 

drawing and tracing index, 128 
key card, 126 

material receipt and notice, 53 
pattern record cards, 130 
purchase orders, 51, 52 
Finances, 

scheduling requirements, 159-161 
Financier, 
balance sheet as viewed by, 30- 
32 
Finished stores (See "Stores, fin- 
ished") 
Fixtures (See "Furniture and 
equipment," "Tools and fix- 
tures") 
Follow-up (See "Tickler") 
Foremen, 
wages of, 
overhead distribution, 228 
Foundry, 
costing on, 
"per pattern" basis, 9 
"per pound" basis, 9 
Freight and express, 
bills, approval of, 55, 56 



1 






472 



INDEX 



■I 



Freight and Express — continued 

commercial, 

cash receipts, entry, 250 
expense distribution sheet, 260 

overhead distribution, 232 
Fuels and lubricants, 

overhead distribution, 230 
Furniture and equipment, office, 

controlling account, 291 

depreciation on, 65 



Gages, 
depreciation on, 65 
standardization of, 116 
General stores (See "Stores, gen- 
eral") 
Goods returned, 
accounting for, 111, 112 
memorandum, 110, 111 
Forms, 369 



Improvements (See "Better- 
ments") 
Incoming cash sheet, 250 

Forms, 436 
Index, 
dies, jigs, fixtures, gages, 116 
drawings and tracings, 128, 129 
purchase orders, 52, 53 

Forms, 355 
stores record, 77, 80-86 
Indirect labor (See "Labor, non- 
productive") 
Industrial accounting (See "Ac- 
counting, industrial") 
Industrial engineering (See "En- 
gineering, industrial") 
Industrial manager (See "Man- 
ager, industrial") 
Industrials, 
balance sheet as viewed by manu- 
facturer, 36-38 



failure of, causes, 4, 5, 7 
loans to, ratio to assets, 4 
organization, divisions of, 221, 

222 
standards lacking, effect of, 4 

Inspector's punch, 
production ticket, 176, 177 

Instruction card, 
production ticket, 175 
Forms, 396-398 

Insurance, 

expense, advanced, 277 

monthly, overhead distribution, 
231 

stock, expense (commercial) dis- 
tribution sheet, 261 

Interest, 

accrued, general, 
controlling account, 303 

accrued on bonds, 
controlling account, 304 

paid, expense (commercial) dis- 
tribution sheet, 261 

received, expense (commercial) 
credit, 264 
Introduction card, new employee, 
201 

Forms, 412 
Inventory, 317-333 

accounts, 282-286 

classification of assets, 327 

drawings and tracings, 128, 129 

equipment record, 332, 333 
Forms, 447 

formal announcement, 321 

organization required, 319 

perpetual, factor in stores sys- 
tem operation, 167 

pricing of, 329, 330 

specifications, 321-326 

tag, 321, 322, 330-332 
Forms, 446 

work in progress, 329 



INDEX 



473 



InTCfitment, 
accounting, f rindple same in all 

industrials, 6 
accounts, 286 
reserves for depreciation, 286, 

287 
Invoices, purchase, 
duplicate copies of, 

when necessary, 53, 54 
method of handling, 53-56 
receipts, checking of, 50 



Jigs, 
depreciation on, 65 
standardization of, 116 

Journal, 
register, 256, 257 

Forms, 440 
voucher, 256, 257 
Forms, 441 



Key card, 
die, 139 
filing of, 126 
fixture and die, 139 

Forms, 380 
operation, 146, 147 

Forms, 385 
part, 104, 120. 124. 125 

Forms, 373 
piece, 104, 120, 122-124 

Forms, 372 
preparation and care of, 126 
production data shown on, 127 
tool, 137, 138 

Forms, 379 
tool set-up, 

Forms, 379 
unit, 104, 120, 125 

Forms, 374 



Labor (Sec also "Costs," "Pay- 
rolls," "Employees") 
account, 280, 281 
capacity, 117 
check upon cost, 160 
costs, 

distribution, 214, 216 

variation in, check upon, 160, 
161 
day-work (See "Day-work") 
distribution sheets, 209 

Forms, 423 
element of production cost, 6 
employee's change in rate card, 

203 

Forms, 412 
employee's rate card, 201, 202 

Forms, 411 
employment, 

application for, 199, 200 
Forms, 406-408 

introduction card, 201 
Forms, 412 
general expense (commercial) 

distribution sheet, 259 
non-productive, 159, 180, 181 

overhead distribution, 227, 22H 
Forms, 423 

time sheet record, 212 
Forms, 417 

time ticket (daily), 180, 212 
Forms, 403 
payment of, 

day work, 173 

period, 206 

piece work, 173 

premium method, 173 
piece-work (See "Piece-work") 
premium work (See "Premium 

method") 
productive, 158, 159 
reference inquiry letters, 200 

Forms, 409 



474 



INDEX 



INDEX 



475 



Labor — continued 
requisition for help, 201 

Forms, 410 
scheduling, 158, 159 
selling expense distribution 

sheet, 262 
stability of, 
eflSciency development affected 

by, 22 
employees' resignations and 

dismissals, 204-206 
motion study dependent upon, 
146 
standardization of, 18, 19 
time sheets, 209-217 

Forms, 417, 418 
time tickets and slips (See "Time 

tickets," "Time slips") 
timing of, 176-179, 180, 181 
"turnover," defined, 18 
waiting time, 177, 212 
Ledger, 
general, 257, 258 
stores (Sec "Stores record") 
Legal expense (Sec "Expense, 

legal") 
Liabilities, 
accounts, controlling, 270 
capital, bonds, and mortgages, 

271 
current, 271 
reserves, 271 
Loans, 
industrials' borrowing capac- 
ity, 4 
.merchants' borrowing capac- 
ity. 4 
Location card, patterns, 131 

Forms, 376 
Loss (See "Profit and loss") 



Machines, (See also "Equip- 
ment") 



analysis of operations, 
standardization through, 19, 
20 
and tools, 

controlling account, 291, 292 
capacity, balance of, 117 
depreciation on, 65 
numbering of, 135, 136 
study card, 135, 136 

Forms, 378 
tabulating, 
"Hollerith," 339 
"Powers," 339 
tool equipment, 
analyzing and grouping of, 
133-148 
Management (See "Scientific 

management") 
Manager, 
employment, 199 
industrial, 
balance sheet (monthly) of, 
25-40 

Forms, 342-347 
duties of, 27, 28 
report (daily) for, 30, 39, 40 
Forms, 348, 349 
Manufacture, continuous, 

defined, 68, 69 
Manufacturers (See "Industri- 
als") 
Manufacturing (See "Produc- 
tion") 
Material (See also "Stores") 
censorship of, 73, 74 
classification of, 80-86, 449 
depreciation by obsolescence, 

6 
element of production cost, 6 
factory, classification of, 80-83 
manufacturing supplies, 82, 83 
obsolete, controlling account, 

306, 307 
office, classification of, 80, 81 



Material— con^tnutfd 
operating supplies, 81, 82 
receipt and notice, 49, 157 
Forms, 354 
distribution of copies, 49 
filing of, 53 
requisitions for, 86-88, 172, 173 

Forms, 359 
routing of, 192-193 
standardization of, 115 
stores, general (See "Stores") 
Merchandise, 
returns of, 110, 111, 112 
standards of operating, 4 
Merchants, 

loans to, ratio to assets, 4 
Models, 62 

standardization of, 115 
Mortgages, controlling account, 

308, 309 
Motion study (See also "Time 
study") 
labor stability factor in use 

of, 146 
record card, 144-146 

Forms, 382 
schedule, 144 

Forms, 383, 384 
time allowance, 145 

N 

Non-productive labor (See "Labor, 
non-productive" ) 

Notes payable, 
cash disbursed, entry, 253 
cash receipts, entry, 251, 252 
controlling account, 302 

Notes receivable, 
asset account, 276, 277 
cash receipts, entry, 251 

Numbering, method of, 
pieces, parts, and units, 120, 121 



Obsolescence, 
depreciation due to, 6 
parts or pieces, 155 
repaired value offset by, 234 
Office, 
appliances, 
systematizer, work of, 339, 
340 
material, classification of, 80, 81 
Operation, 
described not symbolized, 138 
key card, 146, 147 

Forms, 385 
method of, variation in, 143, 

144 
studies, 139, 140 
study card, 140-144 
Forms, 381 
Operations, 
rotation of, 116, 120 

advantages of, 142, 143 
standardization of, 116 
tabulation of, 116 
time studies covering, 116 
Orders, 
betterment, 64, 168, 182, 183 

Forms, 393 
central station, 188-190 
classification of, 59, 167 
contract or sales, defined, 60 
control board, 175, 190 
Forms (insert), 404 
control chart, 188, 189 
Forms (insert), 404 
manufacturing, 60, 61, 62, 152, 
153, 169-170 
Forms, 388 
production, 169-170 
Forms, 392 
assembly (See "Orders, pro- 
duction, assembly, below) 
classes of, 62 
defined, 61, 168 




476 



INDEX 



Orders — conimued 
production — continued 
distribution of, 170 
distribution, depsirtmental, 

105, 106 
material distribution, 104 

Forms, 367 
numbering of, 169 
origin of, 61 
processing, defined, 62 
prorating, 63, 64 
record, 233-235 

Forms, 427 
stores, defined, 63 
production, assembly, 62 
distribution covering, 106 
extensions on distribution 

sheets, 107, 108 
material distribution, 106 

Forms, 368 
prorating, 179, 180 
defined, 168, 169 
time tickets (daily). 

Forms, 402 
purchase, 47 

Forms, 353 
cancellation of, 55 
contractural features of, 47 

48 
distribution of copies, 47, 48 
filing of, 51, 52 
index, 52, 53 

Forms, 355 
schedule, 156-157 

Forms, 389 
spoilage, excess to cover, 

157 
tickler, 48, 49 

Forms, 354 
record of production, better- 
ment and repair, 233 

Forms, 427 
repair, 66, 168. 184, 234 

Forms, 394 



stores clerk, 67, d8, 101 
Forms, 369 
Organization, 221-224 
chart, 223 

Forms, 422 
commercial, 222 
defined, 221, 222 
functions, classification of, 

221-223 
production, '222, 223 
Overhead (See also "Costs," 
"Expense") 
analysis, 264 
classes of, 232, 233 
controlling account, 312, 313 
distribution of, 224-233 
Forms, 423-426 
classification (Dewey deci- 
mal system), 225 
common percentage not 

equitable, 8 
costs, non-productive labor, 

159 
departmental method nec- 
essary, 7, 8 
error in, 8 
expense, 230-232 
factory, controlling account 

as medium, 7 
labor, 227, 228 
materials, 228 
purpose of, 225, 226 
redistribution, 232 
standing order method ob- 
solete, 226 
foundry, 

"per pattern" basis, 9 
"per pound" basis, 9 
manufacturing order to re- 
cord, 60, 61 
non-productive department as 

origin, 232, 233 
productive department as ori- 
gin, 232 



IND&X 



477 



Orerhead — c^ntinned 

prorated, 233 

redistribution of, 232, 233 

unclassified, 
distribution of, 232 
Overtime, time sheets, 

recording of, 211, 212 



Parts, 
"common to all" practice, 118 

manufacturing plan, 154, 155 
defined, 62, 122 
finished or semi-finished, 

purchase of, 117, 118 
key card, 104, 120. 124, 125-127 

Forms, 373 
special, cost of scrapping, 119 
standardization of, 115 
Patents, 
controlling account, 297, 298 
depreciation, 65 

reserve for, 305, 306 
expenses, 260 
Patterns, 
asset, 129 

exceptions, 129 
controlling account, 296, 297 
depreciation, 65 
location cards, 131 

Forms, 376 
record card, 129-131 
Forms, 376 
Pay check, 
and time or clock card, 208, 
217 
Forms, 416, 419 
Payable, accounts (See "Accounts 

payable") 
Payable, notes (See "Notes pay- 
able") 
Pay-rolls (See also "Labor") 
clock or time cards, 208, 217 
Forms, 416, 419 



day-rate method, 
piece-work adjustment ay- 
plied to, 215, 216 
employees' receipt, 208 
"four-times-a-month" system, 

206-207 
graphic charts of, 

check on labor, 160 
method of making up, 207 
time sheets, 209-218 
Forms, 417, 418 
Petty cash, 254-256, 272, 273 
disbursement sheet, 254 

Forms, 439 
voucher, 254 
Forms, 438 
Pieces, 
defined, 62, 122 
key cards. 104, 120, 122-124 

Forms, 372 
standardization of, 115 
tabulation of, 116 
Piece-work, 

clock cards, 207, 217 

Forms, 416, 419 
earning capacity, 148 
scientific management applied 

to, 20, 21 
time sheet record, 213, 215, 216 

Forms, 417, 418 
time tickets and slips, 173 
Forms, 397, 399 
Planning, 
board, 193-195 

Forms (insert), 404 
central station, 167 
system, 188, 189, 190 
Plant, 
betterments, 181-183 

Forms, 393, 401 
capacity, 
labor schedule based on 

analysis, 158 
utilizing, 116-119 



II 



478 



INDEX 



i 

I 
a 



Plant — continued 
repairs, 181, 183-186 
Forms, 394, 402 
Postage, 
expense (selling) distribution, 
263 
Power and light equipment, 

controlling account, 292, 293 
Power plant, depreciation on, 65 
Premium method of paying em- 
ployees, 
clock cards, 207, 217 

Forms, 416, 419 
earning capacity, 148 
time sheet record, 213, 215 

Forms, 417, 418 
time tickets and slips, 173 
Forms, 398, 400 
Price, stores record, 78, 79 
Processing, 
factors, 
expense, labor and material, 
38 
production order, 62 
Product (See also "Produc- 
tion") 
finished, 
controlling account for 

each, 310, 311 
labor, material and expense 
converted into, 165-195 
unfinished (See "Stores, com- 
ponent") 
Production (See also "Costs," 
"Operation") 
assembly production order, ma- 
terial distribution, 106-108 
Forms, 308 
costs, 186, 187 (See also 
"Costs, production") 
card, 236-238 

Forms, 428, 429 
reduced by unified output, 
12 



reduced by volume output, 
14 

stabilizing by depreciation 

charge to liabilities, 234 
variety of items increases, 10. 
department, 
cost, 158, 159 
key card, use of, 127 
elements of, 6, 226, 227 
factors of, 
expense, labor and material, 
38 
handling of, 113-131 

analysis of, 115, 116 
haphazard, results due to, 23 
ledger, 233-236 

orders, 169-170 (See also 
"Orders, production") 
Forms, 392 
defined, 168 
distribution of material, 104 

Forms, 367 
record, 233, 234, 235 
Forms, 427 
pace-making department, 117 
parts balance schedule basis, 

116 
preparation for handling, 113- 

131 
rate-setting, 117 
record clerk, duties of, 104 
sales policy controlling, 118 
schedule, 119, 120, 153-156 

Forms, 389 
standardized output, 15, 16 
terminology used, 62 
time slip (daily), day-work, 
173 
Forms, 399 
time slip (daily), piece-work, 
173 
Forms, 399 
time slip (daily), premium, 173 
Forms, 400 



INDEX 



479 



Production — continued 
time tickets, 173-177 
Forms, 396-398 
day-work, 173 
Forms, 396 
distribution of, 175 
numbering of, 174 
piece-work, 173 

Forms, 397 
premium, 173 
Forms, 398 
unified output, cost reduced 
by, 12, 13 
Profit and Loss, 
accounts, controlling, 270 
general, controlling account, 

314, 315 
monthly, controlling account, 
314 
Prorating orders, 63, 64, 168, 169, 
179. 180 
time tickets, 180 
Forms, 402 
Purchasing 
and receiving, 41-56 
department, 
key cards, use of, 127 
work of, 43 
orders, 47 (See also Orders, 
purchase") 
Forms, 353 
requisitions, 44 

Forms, 352 
specifications covering ma- 
terial, 43 
voucher system, 243-249 
Forms, 432 



Railroads, 
depreciation on, 65 
equipment, depreciation, 65 

Rate 
compensation, basis of, 117 



memo, 147, 148 
Forms, 386 
Real estate, 
controlling account, 288 
depreciation not written off, 

64 

Rebates and allowances, 
expense (selling) distribution, 
262 
Receipt and notice, material, 49, 
53 
Forms, 354 
Receivable, accounts (Sec "Ac- 
counts receivable") 
Receivable, notes (Sec "Notes 

receivable") 
Record, 
check, 252 

Forms, 437 
drawing and tracing, 128, 129 

Forms, 375 
equipment, 332 

Forms, 446 
machine study card, 135-137 

Forms, 378 
motion study, 144-146 

Forms, 382 
patterns, 129-131 

Forms, 376 
petty cash disbursements, 254 

Forms, 439 
price, perpetual, purchasing de- 
partment, 49 
production, betterment and 
repair orders, 233 
Forms, 427 
stores, component, 95, 97 

Forms, 362 
stores, finished, 99 

Forms, 363 
stores, general, 75-80 

Forms, 358 
voucher, 248 
Forms, 435 



48o 



INDEX 



INDEX 



481 



I 



Record — continued 
waiting time (daily), 178 
Forms, 401 
Recorder, stores, 72, 73 
Reference inquiry letter 200 

Forms, 409 
Register, journal, 256, 257 

Forms, 440 
Rejections, 
defective repairs, 188 

Forms, 404 
scrap, rejected for, 187, 188 
Forms, 403 
Rent, 
expense (commercial) distri- 
bution sheet, 261 
overhead distribution, 231 
Repairs, 
assets, fixed, 

depreciation charged, 7 
defective, 
rejected as, 188 

Forms, 404 
time ticket (daily), 177, 178 
Forms, 400 
merchandise sold, 
sales department transac- 
tion, 111, 112 
plant, 168, 183-186 
order, 66, 168, 184 

Forms, 394 
order record, 233 

Forms, 427 
reserves chargeable with, 66 
time ticket (daily), 185 
Forms, 402 
Report, 
general manager's daily, 39, 40 

Forms, 348, 349 
verbal information unreliable, 27 
Request tickets, material, 73, 74 
Requisitions, 
assembly, 103, 104 
Forms, 365 



component store, 97, 99 
for help, 201 
Forms, 410 
general stores, 86-89 
Forms, 359 
routing tag to accompany, 
88 
purchase, 44-47 
Forms, 352 
shop stores. 

Forms, 360 
storekeeper's, 109 
Forms, 369 
Reservations, stores, 69 
Reserves, 
bad accounts, 

controlling account, 306 
commercial expense distribution 

sheet, 261 
controlling accounts, 304-306 
depreciation, 184 
of buildings, controlling ac- 
counts, 305 
of patents, controlling ac- 
count, 305 
investment, 286, 287 
repairs, chargeable to, 66 
Revenues, total, 

controlling account, 310 
Routing desk, routine of, 190-193 
Royalties, 
expense (commercial) distri- 
bution sheet, 260 

8 

Salaries, 
expense (commercial) distri- 
bution sheet, 259 
Sales, 
analysis sheet, 239 

Forms, 430 
cost of, controlli«g tcc«u«t, 
311 



Sales — continued 
department, 
costs affected by policy of, 

11 
function of, 11, 12 
goods returned, handling of, 
110-112 
expense percentages based 

upon, 258 
orders, 60 

records, factor in determining 
production, 23 
Salesmen, advance expense, 278 
Schedules, 149-164 
department, use of key card, 

127 
importance of, 161 
labor, 158, 159 
master, 152, 159 

Forms, 388 
motion study, 144 
Forms, 383, 384 
production, 153-156 

Forms, 389 
purchase order, 156, 157 

Forms, 389 
purpose of, 151, 152 
sales requirements, 116 
scope of, 151, 152 
Scientific management, 
results of, 20, 21, 23 
Scrap, rejected for, 187, 188 

Forms, 403 
Selling (See also "Sales depart- 
ment") 
profit affected by method 
used, 12 
Semi-finished stores (See 

"Stores, component") 
Shipping supplies, 

overhead distribution, 228 
Shop, 

fixtures and fittings. 

controlling accotinf, 294,20? 



depreciation on, 65 
stores, 68, 285, 286 
requisition, Forms, 360 
Shorts, 103, 107 

elimination of, 108 
Shows and demonstrations, 
expense (selling) distribution, 
262 
Solvency, 
financier's viewpoint of bal- 
ance sheet, 31 
Standardization, 

advantages gained by, 118 
Stock (See "Capital stock") 
Stores (See also "Material," also 
"Stores, general," below) 
balance, daily report, 108 
classes of, 68 
component, 91-99 
controlling account, 98, 99, 284 
costing out, 94 
defined, 68, 93, 94, 95 
items excluded from, 93 
record, 95-97 
Forms, 362 
requisitions for, 97, 98 
"work in progress," method of 
handling, 93 
finished, 
controlling account, 284, 285 
defined, 68 

items excluded from, 93 
record, 99 

Forms, 363 
"work in progress," method of 
handling, 93 
general (See "Stores, general," 

below) 
receipts in, parts or pieces fin- 
ished, 96 
requirements as to, 68, 69 
requisition, assembly, 103, 104 

Forms, 365 
reservation of, 69 



482 



INDEX 



Stores — continued 
shop, 68, 285, 286 
requisition, Forms, 360 
Stores, general, 57-90 (See also 
''Stores," above) 
classification, 80, 83-86 

Forms, 449 
control of, 74, 75 
controlling account, 282 
defined, 68 

department floor plan, 76, 88 
distribution, classification, 80 
inventory should not exceed 

sixty days requirements, 34 
keeper (See "Stores keeper," be- 
low) 
ledger (See "Stores record," be- 
low) 
location chart, 76, 88 
material returned to, 89, 90 

Forms, 359 
office material, 80 
order, 67, 68, 109 

Forms, 369 
receipts, 49, 157 

Forms, 354 
record, 75-80 

Forms, 358. 449-466 
entries, 77-80, 157 
functions of, 75 
indexing of, 77, 80-86 
prices, 78, 79 
work in progress, 75, 76 
recorder, requisitions, purchase, 

45,46 
requisitions, 86-88, 172, 173 

Forms, 359 
standardization, 59 
voucher system, 244 
Stores keeper, 71, 72 
key card, use of, 127 
order, 67, 68, 109 

Forms, 369 
responsibility of, 43, 46 



Stores-keeping, 68-71 
objects of, 108, 109 
routine of, 69, 70 
Studies, 
machine, card, 135 

Forms, 378 
motion, 144-146 

Forms, 382 
operation, 139, 140-144 
Forms, 381 
Supplementary tag, 187 

Forms, 403 
Supplies, 
manufacturing, 

classification of, 82, 83 
office, 
expense (commercial) distri- 
bution sheet, 260 
expense (selling) distribution, 
263 
operating 
classification of, 81, 82 
defined, 228, 229 
overhead distribution, 228, 229 
shipping, 228 
Surplus, controlling account, 309 
Symbols, 
material and process identifica- 
tion, 61, 62 
use of, advantage, 225 
Systematizcr, work of, 335-340 



Tag, 
inventory, 321, 322, 330-332 

Forms, 446 
machine, 193, 194 
rejected for defective repairs, 

188 

Forms, 404 
rejected for scrap, 187, 188 

Forms, 403 



INDEX 



483 



Tag — continued 
routing, requisitions for produc- 
tion material to have, 88 
supplementary, 187 

Forms, 403 
tracing. 170-172 
Forms, 395 
use of, work in progress, 96 
workman's, 194 
Taxes, 
accrued, controlling account, 303 
corporation, 
expense (commercial) distri- 
bution sheet, 260 
overhead distribution, 231, 232 
Telegraph and telephone, 
expense (commercial) distribu- 
tion sheet, 260 
Tickler, 

purchase order, 48, 49 

Forms, 354 
purchase voucher, 246 
Forms, 433 
Time, 
card (clock card). 207, 217 
Forms, 416, 419 
checking against, 212 
sorting of, 216 
keeper, duties of, 207 
lost (See "Waiting time") 
sheet, 209-218 

Forms, 417, 418 
departmental and order distri- 
bution, 216 
use of, 209, 210 
slip, 173 
day-work, 173 
Forms, 399 
piece-work. 173 

Forms, 399 
premium work, 173 
Forms. 4(X) 
studies, operations to be covered 
by, 116 



ticket, 
defective repairs, 177 

Forms, 400 
distribution of, 216 
non-productive labor, 180 

Forms, 403 
plant betterments, 183 

Forms, 401 
plant repairs, 185 

Forms. 402 
production. 173 

Forms. 396-398 
prorating order, 180 

Forms, 402 
waiting time, 178. 212 
Forms, 401 
Tools, 
and fixtures, 
shop, depreciation on. 65 
standardization of, 116 
care of, 137 

data for operation key card, 147 
depreciation on. 65 
key card. 137, 138 

Forms, 379 
set up key card, 138, 139 

Forms. 379 
small and hand, 

classification of. 82 
symbols assigned to. 137 
Tracings (See "Drawings and 
tracings") 
tag. 170-172 
Forms, 395 
Transportation charges. 55, 56 
Traveling, 
expense (selling) distribution, 
262 
Treasury, 
bonds, 279 
stock, 279, 280 
Trucking, 

overhead, distribution, 228 
Turnover, labor, 18 



484 



INDEX 



U 

Unfinished stores (Cee "Stores, 

component") 
Unified balance sheet (See "Bal- 
ance sheet") 
Unit, 
defined, 62, 121, 122 
key cards, 104, 120, 135 

Forms, 374 
secondary, defined, 122 
standardization of, 115 



Voucher, 
cash, petty, 254 

Forms, 438 
charge, 247, 248 

Forms, 434 
claim, 54 

Forms, 355 
journal, 257 

Forms, 441 
purchase, 243, 245-247 
Forms, 432 

charge voucher deducted, 247 

tickler card, 246 
Forms, 433 

impaid file, 246 
record, 243, 244, 248, 249 

Forms, 435 
system, 

general stores under the, 244 



void, disposition of, 255, 257 

W 

Wages, 
day rata to be set, 202 
department, change of, 203 

Forms, 413 
employees rate card, 201, 202 

Forms, 411 
piece rates, 202 

reduction of, 202 
premium earnings, 

method of handling, 208 
rate, change of, 202, 203 

Forms, 412 
Waiting time, 
ticket, daily, 178 

Forms, 401 
time sheet record, 212 
Work in progress, 

betterments, treatment of, 182, 

183 
controlling account, 282-284 
inventory, 329 
stores, 

as medium of handling, 69-71 

component, relation between, 
93 

finished, relation between, 93, 
94, 95 
general stores record, 75, 76 



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